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Market Talk – July 23, 2015

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It has taken a while but today we saw the return of the sellers in the oil market. TWI and Brent both down around 1.7%, taking TWI to 48.25 last trade. Natural gas also took a beating, down almost 3% at 2.825. Gold did try to bounce and spent the majority of the day above 1100, but as the session wore on, late New York trading saw a revisit to recent lows around the 1090 level. A closing tomorrow BELOW 1130 will keep gold in a bearish posture, raising the risk that the next two weeks could bring lower prices. The underlying four Weekly Bearish Reversals warn that we may not fall apart all at once, but a closing tomorrow BELOW 1084 will be very bad for gold.

The euro continued yesterday’s rally touching the 110.00 and recovering much of the ground it lost against Sterling. Cable (£/$) was under pressure today closing late in Europe down about 0.7% on weaker than forecast UK Retail Sales (-0.2% expected was +0.3%).

Again the Turkish lira lost another 1% against the US$ taking the decline on the week to 4%. From its best level this year, the decline has been 17% and over two years is almost 22%.

The US$ clearly remains the safe-haven trade and this trend is only expected to accelerate as deflation continues to engulf Europe.

Stocks in Asia and Europe were pretty much flat with the exception of Shanghai +2.45%, but in the US it was a different matter. The Dow is off currently -0.7% whilst the broader market (S+P) is off -0.58% at the time of this writing.

Treasury dealers confirm that the flatter US yield-curve is the result of the flight to quality and funds taking money off the table. That trend appears to have accelerated today (obviously helped by the softer economic data) and the TY 10yr is trading at the day’s highs (126.62) up around 50 cents.

Gilts was also one of the star performers today but that is hardly surprising following the sales numbers.