Credit spreads have widened significantly again this week,
which is why treasuries rallied, and October rate cut
probability increased to 100%. More cuts will likely be
needed. I don't think now the dollar will rally, not at all.
While trade deficit numbers should normally improve when
the economy slows down, high oil price makes
that virtually impossible. Got stagflation? I expect
another record for foreign dumping of US assets soon.
Why? Cause they hold these bonds. They will sell what they
can. They can't sell some mortgage securities, but they
still can sell other securities. It's nuts to think they
will buy dollars now, all IMHO. Gold did NOT go down, the
dollar dropped to a new low. Still loaded on the dollar
drop, but shifted a bit from gold to Yen. A high spec position
in gold makes me a bit uncomfortable. I have stops for gold
as well. A recession is not good for commodities, including
gold. Oh, I know the cries it is a currency, which are
partially correct - gold has a currency side, and a commodity
side to it. In general, I would expect gold to rally in dollar
terms. |
