Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Cross Asset Strategy

Developments over the past 24 hours have meant that US 10Y breakeven is now at its highest for more than a month. Importantly the level highlighted yesterday at 2.38% has given way. The setup now argues for a move to 2.55% - close to the trend highs seen in MayUnless nominal yields rise by more than 15bps, real yields are either going to stay unchanged at low levels or move even lower into negative territory, as they have started to do again todayAt the same time developments in China’s equity markets remain bearish which is now beginning to feed through to the currency.With Chinese and European authorities both on the dovish side, is this the time for the Fed to stay on the fence or be hawkish? Instead, could a dovish Fed provide the trigger for a weakening USD (perhaps ex USDCNH) and ultimately a rise in Gold?

Developments over the past 24 hours have meant that US 10Y breakeven is now at its highest for more than a month. Importantly the level highlighted yesterday at 2.38% has given way. The setup now argues for a move to 2.55% - close to the trend highs seen in MayUnless nominal yields rise by more than 15bps, real yields are either going to stay unchanged at low levels or move even lower into negative territory, as they have started to do again todayAt the same time developments in China’s equity markets remain bearish which is now beginning to feed through to the currency.With Chinese and European authorities both on the dovish side, is this the time for the Fed to stay on the fence or be hawkish? Instead, could a dovish Fed provide the trigger for a weakening USD (perhaps ex USDCNH) and ultimately a rise in Gold?

Technical Analysis

Price action on the DXY Index daily chart is warning of a turn again. It is the opposite of what we saw at the other end of the range in MayA break below 92.59 would likely open the way for lower levels

Price action on the DXY Index daily chart is warning of a turn again. It is the opposite of what we saw at the other end of the range in MayA break below 92.59 would likely open the way for lower levels

The developments taking place on Copper and the wider London Metals Exchange Index, indicate further gains from here in base metals. The corrections over the past couple of months seem to be over and we might even be ready to rally back to the trend highs.Should that unfold, it would only bring inflationary pressures back to the fore and help push breakevens higher, which has already started to happen.Combining that with the recent trouble in Chinese equities &amp; the low nominal yields has resulted in the lowest ever print on US 10 year real yield today.Unless one believes nominal yields are going to shoot up quickly (not a belief held here even if there seems to be little value in Bonds) then this picture should continue to provide a positive backdrop for precious metals and a negative one for the USD generally.

The developments taking place on Copper and the wider London Metals Exchange Index, indicate further gains from here in base metals. The corrections over the past couple of months seem to be over and we might even be ready to rally back to the trend highs.Should that unfold, it would only bring inflationary pressures back to the fore and help push breakevens higher, which has already started to happen.Combining that with the recent trouble in Chinese equities &amp; the low nominal yields has resulted in the lowest ever print on US 10 year real yield today.Unless one believes nominal yields are going to shoot up quickly (not a belief held here even if there seems to be little value in Bonds) then this picture should continue to provide a positive backdrop for precious metals and a negative one for the USD generally.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Our weight of the evidence approach continues to lead us to our view that the market remains mixed-yet-constructive overall. We explain our outlook below. The S&amp;P 500 remains bullish, progressing past our first target of 4350 and now on its way to our next target of 4400-4406. As long as 4257-4275 support holds, we expect to see 4400 followed by 4460. Should 4257 fail to hold, our next support levels to watch would be 4164 followed by 4120; we are constructive as long as 4120 holds.

Our weight of the evidence approach continues to lead us to our view that the market remains mixed-yet-constructive overall. We explain our outlook below. The S&amp;P 500 remains bullish, progressing past our first target of 4350 and now on its way to our next target of 4400-4406. As long as 4257-4275 support holds, we expect to see 4400 followed by 4460. Should 4257 fail to hold, our next support levels to watch would be 4164 followed by 4120; we are constructive as long as 4120 holds.

U.S. Equity Strategy: SPX 4400 Target In Sight

Platinum has progressed to post a short term bullish break. The lower yield environment with a still vulnerable looking USD is providing a good backdrop for precious metals.  Expect continued gains for platinum and the rest.

Platinum has progressed to post a short term bullish break. The lower yield environment with a still vulnerable looking USD is providing a good backdrop for precious metals.  Expect continued gains for platinum and the rest.

United States

The U.S. Dollar Index(USDX) indicates the general int'l value of the USD. The USDX does this by averaging the exchange rates between the USD and major world currencies. The ICE US computes this by using the rates supplied by some 500 banks. FOR REAL TIME SEE EIS ICEA<GO>.

Price Gauge
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Dollar Index (DXY CURNCY)

Bonds & FX: Here Comes Trouble

US real yields are likely to remain at trend lows or move even deeper into negative territory. With China and Europe both dovish, is the Fed going...

Shyam Devani

The USD Index (DXY) Is Tired

Fresh price action indications are pointing towards a weaker USD. Watch 92.59 in the short term on the Dollar (DXY) Index

Shyam Devani

Bonds & Commodities - An Interesting Mix

Higher Base metals bring inflationary concerns. When combined with low nominal yields we are now at the lowest level on US 10Y real yield which...

Shyam Devani

U.S. Equity Strategy: SPX 4400 Target In Sight

The S&P 500 remains bullish, progressing past our first target of 4350 and now on its way to our next target of 4400-4406. As long as 4257-4275...

Vermilion Research

Platinum: Bullish Break

Precious metals continue to hold up and the recent break on Platinum only adds to the bullish stance. Further short term gains are expected on all

Shyam Devani

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