Investor sentiment continues to strengthen, and nowhere is that more evident than in Europe — the new darling of mutual and hedge fund managers. The past 15 weeks have seen more than $22 billion pour into European equity markets, in the longest stretch of uninterrupted inflows since 2002.
The Japanese yen and benchmark Nikkei 225 equity index both broke out of significant consolidations last week. The moves are highly related; in fact, the negative correlation between Japanese equities and the yen has been incredibly consistent over time.
While West Texas Intermediate crude is on pace for its third consecutive monthly decline, which would be the longest losing stretch in nearly five years, its trans-Atlantic cousin, Brent crude, is flirting with its highs.
Since the start of November, a confluence of cold temperatures, production setbacks, and infrastructure maintenance, has conspired to push natural gas prices to the highest level since last April for a front-month contract.
After more than a decade of perpetual strength, gold suffered its worst losses since the early 1980s. Many investors have eschewed the metal in favor of stronger markets; however, this has helped to return this long-term bull market to health.
Since the beginning of February, the discount of WTI to global prices has fallen quickly, primarily because of changes in pipeline infrastructure that has brought cheaper mid-continent crude oil to the U.S. Gulf coast.
The PGM metals — platinum and palladium — are typically highly correlated assets. However, since February of this year, they have diverged, with palladium pushing toward the highs while platinum has languished.
Tapering and tightening are not the same thing. Tightening is tantamount to stepping on the brakes, while tapering is akin to easing up on the gas pedal. Whether this analogy holds true depends on which “effect” the market is more sensitive to.