An impressive stock market rally has continued in the face of mixed US economic data, China continues to show signs of weakness, and the Euro zone isn’t sure if it needs more central bank assistance.
US Dollar
Economic Data Has Softened in the US and China
Economic data has softened in the US and China over the last two weeks, yet some commodity funds have been seen bottom-picking.
Commodity Prices Seeing Liquidation Pressure
The uneven pattern of US scheduled economic data continues, with a jump in initial jobless claims seen on the same day as ongoing jobless claims fell to their lowest level since November of 2000.
Fed Not Confident in Pace of US Growth
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.
Prospect of a Global Currency War is On the Rise
On one hand the Chinese currency debacle has tripped up sentiment, but on the other hand the markets have not shown progressive anxiety, and the shelf-life of the crisis appears fairly short.
Strong Dollar, Burdensome Commodity Supplies
The challenges for physical commodities are slack global demand, the Dollar remains strong and commodity supplies are generally burdensome.
Uncertainty Toward Financial and Economic Conditions Has Reached a Crossroads
We have to predict a major agricultural and financial juncture just ahead.
Global Recovery On the Horizon
We think that a September US rate hike is off the table because of a lack of definitive forward progression in the US jobs sector. The unending Greek saga combined with a rising Dollar has created enough headwinds to keep the Fed on the sidelines until later in the year.
Commodity Sentiment Anticipating Normal Inflation Ahead
Things are changing on the macroeconomic front, as instead of patently deflationary fears, sentiment is starting to anticipate normal inflation ahead.
Change Is In the Air!
While the world continues to be disappointed with the rate of recovery in the US, Europe and parts of Asia, the skies are clearing, and signs of improving US Payrolls, strong global auto sales figures and rising energy prices suggest that the economy is moving back towards normal.