Recent talk of fresh easing from the BOJ and BOE seems to have been largely discounted as ineffective, and that has prompted a revival of safe haven interest in gold and US Treasuries.
Commodity markets are seeing nearly a perfect storm of bearish factors during the first 2 weeks of 2016.
In looking ahead to the coming week, we expect additional commodity pressure going into the FOMC meeting off of a stronger dollar in anticipation of an interest rate hike.
A much better than forecast look at October US jobs data has strengthened the chances for a December Federal Reserve interest rate hike.
With the Fed taking a pass on hiking rates in September, a reduction in their 2016 and 2017 growth forecasts, and only minimal dissension within their ranks against a steady policy stance, it appears that they are not confident enough in the pace of US growth to make a move at this time.
In the wake of the capitulation event a couple of weeks ago, global sentiment has continued to improve.
The list of positive global data flows expanded last week with improvements in UK Unemployment, China Retail Sales, and US February and March Industrial Production figures.
The improvement in the global economy continues, but the recovery pace obviously isn’t providing much in the way of support for the commodity markets.
Many times, changes in trends come from the outcome of the biggest events. The conclusion of the latest calamity out of Washington and the recent appointment of the dovish, Janet Yellen to replace Ben Bernanke may be what the bond market needs to wake up from its recent 6 month slumber.