📊 Cautious Investor Market Weekly #22
The $8 Trillion Cash Mountain and the Rising Cost of Risk
🏦 US & European sovereign debt stress
💵 $8T in cash — No rate cuts, no cash cuts
⚡ Oil, Ukraine & the inflation shock
🤖 AI's growing financing burden
🌏 The evolving global carry trade
13 @KnovaWave charts covering bonds, FX, energy, gold & semiconductors.
Markets don't lack money. They face increasingly expensive competition for it.
https://t.co/rwPXsIL2jq #Markets #Bonds #Macro #Oil #AI
The key is whether the French problem starts spreading to Italy, Spain and other eurozone sovereign markets.
If German Bunds rally while French and Italian spreads both widen, that would suggest a broader fragmentation trade.
But if Italian and Spanish spreads remain relatively contained while French OATs continue selling off, this is predominantly a France-specific political and fiscal credibility problem.
There's another interesting angle here. France's debt is approaching 120% of GDP, yet unlike the US, it doesn't independently control the currency in which its sovereign debt is issued.
Paris burning continues …
#France 10-year OAT 5.142%
Highest since 2002
OAT–Bund spread 173 bp
Widest since 2011
France–US 10-year spread has just crossed into positive territory for the first time since 2013 but to us the real story is the OAT–Bund spread.
In mid-September it was roughly 95 basis points. Now we're talking about 173 basis points.
That's an extraordinary repricing in just over a month.
Remember punters time and price is everything in trading - something delusional self important overpaid tech grifters missed in their f’ the public handbook - oh well
Personal news: thrilled to announce I joined Bloomberg News as a Middle East oil reporter in Dubai this week. Look forward to taking on the challenge of covering the biggest energy crisis with some of the best in the biz.
Thanks to all who made the Reuters journey memorable.
Gold, silver and copper: an important warning
#Gold$4,065.14−1.83%
#Silver$55.77−3.77%
#Copper$6.36−2.74%
We shouldn't ignore the fact that gold is falling while Treasury yields decline and equities weaken.
Normally that combination could be supportive of gold.
Instead, silver and copper are being hit considerably harder, suggesting liquidation, profit-taking or a repricing of industrial demand is taking precedence over the traditional safe-haven narrative.
For our gold-miner trading framework, I would watch whether $NEM and $GDX demonstrate relative strength against bullion before considering another tactical $GDXU entry.
Gold miners holding up while gold declines would be constructive. Miners underperforming bullion would suggest the correction still has work to do.
@MPelletierCIO Energy down a surprise - anything specific ? Haven't had time to look given oil and natty and French bonds taking all my attention this week