INFLATION, CRB, Oil Cycle and Rates

[drbubb]

RATES were Slow to follow prices UP; Then, TYX did NOT decline, as UNL & CRB slid.

Gap of TYX (over Unleaded) has stayed wide...

UNL/ Unleaded Gasoline. 2021: mid'21: Ytd: 10d/: $2.514,-42% v.Yr.H: $4.326 FX-10d

CRB.it/ Comm.RB Idx. 1/'21: 7/'21: YTD: 10d/: $22.94,-22.3% off Yr.H: $29.52 . 2.16.23

[drbubb]

INFLATION BELLS, with CRB, USO & GLD - Updated from Time to Time

TYX & CRB + "3 Bells": YTD.  FED is crushing everything, except KING Dollar with TYX Rates . 12.12.22

TYX .  YTD: w/TYX: $36.39= 3.64% . since 2020: UnL.Gaso. broke Uptrend. Rates may too. 9.22.22

GLD / Gold got big push in 2020, after the Covid selloff. And after that rally to $2000+ has mostly traded sideways/down.

CRB-etc caught up and surpassed Gold in 2022.  Now CRB and XLE may be about to slide.  Gold is still waiting for a second wind. Gold Rally to above $2000 ahead? ...

CRB-etc. since 2020: Last: $26.83 x 10.6x-ish = $CRB: $284

CRB Index, 5 years, Last: 290.41 - 3.17. -1.08%

CRB is a Commodity index,  mostly Energy,  It may be set to break its uptrend.  It may follow Gasoline lower.  Paradoxically, this could be GOOD for Gold, which in recent year has shown a negative correlation with Oil and Energy.  And moreso, inverse to prices of Gold miners, partly because oil prices are part of mining/extraction costs.

GOLD to CRB got very cheap at r-5.6x ($1845/$329). An upturn may be underway. 

How long will the upswing last?  It may depend on whether investors prefer Gold to Oil investments.

Date-day  Gold/ $CRB : Ratio :    GLD  /  it:CRB = Ratio ($/it.C
\6.09-Th 1845/ 329.00= 5.61 :  172.23 / $29.25= 5.89 (11.25)
\6.10-F :  1830/ 326.00= 5.61 :  174.54 / $29.27= 5.96 (11.14)
\6.13-M : 1831/ 321.50= 5.70 :  169.93 / $29.06= 5.85 (11.06)
\6.14-Tu:  1818/ 316.00= 5.75 :  168.57 / $29.06= 5.80 (10.87)
===
07.01-F : 1802/ 291.83= 6.17  : 168.32 / $26.57= 6.33 (10.98)
07.05-Tu 1764/ 278.16= 6.34  : 164.75 / $25.82= 6.38 (10.77), gold-2.1%, crb-4.7%

Ratio: GOLD-to-CRB: $1729/$284= r-6.09, 8.9% off r-5.59 Low ($1800/$322)...

GLD/it:CRB: $159.82 /$26.83= r-5.93 vs. low of ($169/$27.00) = r-5.73

===

[drbubb]

Mega-Bullish on Gold (and Gold shares) UGL wCrb: YTD: w/GDX: GLD-1yr: UGL 10d:  GLD: GDX 10d.

Gold is now very cheap vs. CRB too - see above:

OLD chart showing long term Cup & Handle



Gold's L.T. Cup & Handle : Explanations: Handle should end in top 1/3 or upper 1/2

ALTERNATING RALLIES, GP>OP>GP>OP ... Gold Peaks (GP) versus Oil stock Peaks (OP) .. update :

UPDATE follows - 9.9.2022

[drbubb]

INDU / DowJones Ave.  2019: 1yr: Ytd: 10d / Last: 32,151, R: 29,653- 36,953 ++ spy: iwm: tlt: gdx: xle:  

OLD / Vs.18,740 Rise (100%). At: 29,653 +11,440 (61.0%), At: 29,784 (61.8%), At: 27,583 (50%)

INDU / Dow Jones Indu. Average ... since 1970-Mo: v2: 1985: 2000 / Last: 30,967.82, yrL: 29,653.29 to 36,952.65

1970.v2

1985: 2000 / Last: 30,967.82, yrL: 29,653.29

2000-Mo: 2006-Mo: 2006-wk: 2012: 10d / Last: 30,967.82, yrL: 29,653.29

2006-wk: 2013wk: 2013d: 2019: 1yr: Ytd: 10d / / Last: 30,967.82, yrL: 29,653.29

==

[drbubb]

GLD : Updated : $154.95

DBA : update : $20.59

SPY : 406.60 : XLE: 80.60. =Ratio:

IWM : 187.40 / TNA: 42.39 : Ratio 4.42x

Online comment:

This INDU / DJIA chart could have a Bullish conclusion, it is on an lower channel uptrend now.  I know there are some uber Bears out there, but I suggest you watch this trend line over the rest of Sept

[drbubb]

GLD / Gold vs possible inflation bellwethers :

XLE (energy), DBA (grains/food) . update : from 2008: 2yr : 6mo : 10d : sep.2022 update

[drbubb]

Tuesday Inflation shock, hits Stocks, and Gold

====  CRB.it :  USO : RBOB:  DBA: =:   XLE :   GLD :
Ye’20 12.834: 33.01: 00.00: 16.14: =: 37.90: 178.36:
6/’21: 16.790: 49.88: 00.00: 18.63: =: 53.87: 165.63:
Ye’21  19.538: 54.36: 00.00: 19.75: =: 55.50: 170.96:
Mar.: 25.420: 74.12: 00.00 : 21.88: =: 76.44: 180.65:
Apr.: 27.850:  77.16: 00.00 : 22.07: =: 75.15: 176.91:
May: 28.330: 85.47: 00.00 : 21.99: =: 87.20: 171.14:
Jun: 26.525: 80.35: 00.00 : 20.38: =: 71.57: 168.46:
+ %: -6.38%: -6.00: 00.0%: -7.32% =: -17.9% -1.57%
Yoy% 58.0%: 61.1%: 00.0%: 9.39% =: 32.9% +1.71%
July: 27.375: 78.05: 00.0%: 20.19: =: 78.42: 164.10:
+ % : 3.20%: -2.86: 00.0%: -.93% =: 9.57% -2.59%
Aug: 27.435: 73.11: 00.00: 20.63: =: 80.50: 159.27:
+ % : 0.22%: -6.33:  00.0%: 2.18: =: 2.65% -2.95%

Ted S, says:  "DJIA’s 1,300 point drop and NASDAQ’s -6.2% fall bolster the odds in favor of a 3rd wave down." 

/ AGREED,  many of the inflationary rises were things that do not show up in my (superficial) monitoring of Commodity prices...

INDU / DJIA at 31,105, -1276, - 3.9%, is back down, testing the long term trendline, while XLE/ Oil stocks (as proxy for oil), and DBA/ Agri commodities are holding up

BONDS as Safe Haven again?  In siding stock market: TLT opened 1% Lower with INDU down -600, then got bids as stocks slid much further.  TLT closed at 107.67, up 0.25% on the day.

 

[drbubb]

RECORD WEALTH LOSS

InteractivePolls. @IAPolls2022

REUTERS: household wealth fell by a RECORD $6.1 trillion in Q2 2022 In 2022:

Nasdaq declined by 26.16% S&P 500 declined by 18.15% Bitcoin declined by 57.34% 30 Year Fixed Mortgage Rate: Jan 2021: 2.65% Sep 2022: 6.28% Inflation Jan 2021: 1.4% Sep 2022: 8.3%

 

Does it matter who is President?

 

[drbubb]

Bonds have a chance for a LOW here... or nearby

TLT / Bonds ... YTD: 10d: 108.03 +1.78, + 1.68%, yrL: 105.40, now 2.50% higher

TMF / Bull 3x etf, bonds ... YTD: 10d: $10.15+0.45, +4.64% (2.76x), yrL:$9.45,+7.41%
Range, TMF ($9.45-32.44) > +243%, 5.15xTLT move.    / Last: 108.03/10.15= r10.64
Range, TLT (105.40, 11.15x -155.12, 4.78x) >+47.2%

USD may be peaking here; in EUR, JPY, GBP ... YTD: 10d / H. of day: 1.0195, 145.37, 0.8913=1.122

YTD: 10d / H. of day: 1.0195, 145.37, 0.8913= $1.122

There may be enough momentum left to get the JPY price to 150.  And we have not yet seen the Usual head-and-shoulders type formation that typically comes at Tops.  See chart....

UsdJPY ... All: Last: 145.65 + 1.57

JPY just took a Big Hit!  
141.992 -2.087, -1.45%.   Day's H:  145.891,   Now -2.7% OFF that High. Which is a Big drop in under one hour, it seems.  TLT bonds are higher so far.  Look for GOLD to rally, if these moves hold!

[drbubb]

SUGAR as a possible Inflation bellwether...

SUGAR, DBA, CRB... ALL: 10yr: 5yr: ytd: 10d/ 17.78, 20.26, 26.25

vs. Peaks: sugar H.: 20.69, -22.7%. DBA H.: 23.01, -12.0%, CRB H.: 29.52, -11.1%

10yr: 5yr: ytd: 10d/ 17.78, DBA: 20.26, 26.25

[drbubb]

FX extreme?  We may be getting a BOTTOM soon in EUR, GBP, JPY, etc

EUR,GBP. All: 10yr: 5yr:Ytd: 10d / EUR: $0.961, Eur1.04 GBP: $1.072 / JPY: 144.55, KRW: 1,431

[drbubb]

TYX & CRB + "3 Bells": YTD.  FED is crushing everything, except KING Dollar with TYX Rates . 10.10.22

[drbubb]

Sounds plausible:  INFLATION WILL BE... WHAT THEY CAN GET AWAY WITH, llke 4-6%: 

CHARTS and Inflation expectations...

Per Russell Napier, a rise in Inflation to the 4-6% level is sustainable, and can be expected/  This might come with LT bond yields staying near the current level 4%.  In the next few months. Short term rates may be above LT rates/ TYX until inflation comes down from 8%

TYX / 30 Year Treasury Bond Yield. All: 3yr: 2yr: Ytd: 10d / Last: 39.78= 3.98%, YrH: 4.02%

"What level of inflation would do the trick?

I think we’ll see consumer price inflation settling into a range between 4 and 6%. Without the energy shock, we would probably be there now. Why 4 to 6%? Because it has to be a level that the government can get away with. Financial repression means stealing money from savers and old people slowly. The slow part is important in order for the pain not to become too apparent. We’re already seeing respected economists and central bankers arguing that inflation should indeed be allowed at a higher level than the 2% target they set in the past. Our frame of reference is already shifting up."

Would that apply to all Western central banks?

Certainly to the ECB and definitely to the Bank of England and the Bank of Japan. These countries are already well on their path to financial repression. It will happen in the US, too, but we have a lag there – which is why the dollar is rising so sharply. Investment money flows from Europe and Japan towards America. But there will come a point where it will be too much for the US as well. Watch the level of bond yields. There is a level of bond yields that is just unacceptable for the US, because it would hurt the economy too much.

Won’t there come a point where the famed bond market vigilantes would step in and demand significantly higher yields on government bonds?

I doubt it. First, we already have a captured investor base that just has to buy government bonds. And if push comes to shove, the central bank would step in and prevent yields from rising higher, with the ultimate policy being overt or covert yield curve control.

> https://themarket.ch/interview/russell-napier-the-world-will-experience-a-capex-boom-ld.7606

[drbubb]

CRB, Inflation expectations, and Bond Yields...

Per Russell Napier, a rise in Inflation to the 4-6% level is sustainable, and can be expected/  This might come with LT bond yields staying near the current level 4%.  In the next few months. Short term rates may be above LT rates/ TYX until inflation comes down from 8%

CRB vs. TYX ... All: from Oct.2011: 7/2016: 9/2019: 2yr: Ytd: 10d: 27.15 / TYX-39.78 =68.3%.

7/2016: 9/2019: 2yr: Ytd: 10d: 27.15 / TYX-39.78 =68.3%.

Oct.2011: 7/2016: 2yr: Ytd: 10d: 27.15 / TYX-39.78 =68.3%

CRB (blue line) is like mostly Energy-related commodities.  When it collapsed, it brought 30 Rate rates down.  And in the last two years after that, it soared.  Now CRB is sideways for a few months, but Bond Yields kept rising.  30 yr Bond yields are At 4% Now, and they may have gone high enough

 

[drbubb]

RATES were Slow to follow Gasoline prices UP; NowTYX is NOT declining as fast, as UNL slides

UNL./ Unleaded Gasoline . 1/'21: YTD: .. 10d/ Last: $2.099,-52% off Yr.H: $4.326 . FX-10d

Strong Support near: UNL: $2.099. TYX 35.76: 3.576%, just -19% off Yr.H: 44.25

YX & CRB + "3 Bells": YTD.  FED is crushing everything, except KING Dollar with TYX Rates . 12.12.22

[drbubb]

Gap of TYX (over Unleaded) is Narrowing ... at 1.13.23

UNL./ Unleaded Gasoline . 1/'21: YTD:10d/: $2.54,-41% v.Yr.H: $4.326 FX-10d

[drbubb]

INFLATION Remains Tame.  YoY comparisons set to look deflationary in first half '23

Year on Year comparisons for OIL etc, may help drag Inflation lower.  YoY comparisons are likely to be very deflationary for the entire first 7-8 months of 2023.  With the Month of MAY being the most deflationary month. I don't hear enough people talking about this (rather obvious) fact, so it may take the market by surprise, if there is a sharp decline in YoY wholesale Energy and Food price inflation. Actually, It is not hard to run these sorts of calculations, but i wonder how many do so? (haha)

UNL./ Unleaded Gasoline -etc . 1/'21: YTD:10d/: $2.573,-41% v.Yr.H: $4.326 FX-10d

 

CRB & OIL INFLATION, Year-on Year
====  USO: +12mo:  chg. ::  Crb.it: +12mo:  chg. ::  UnGL: +12mo: chg, :: /  Aver.%
9/’21: 52.56: 65.28: +24.2%   18.67: 26.31 : +40.9%  2.194:  2.370: +8.02%/ +24.4%
Ye21 : 54.36: 70.11 : +29.0%  19.53: 24.63: +26.1%   2.228:  2.478: +11.2 %/ +22.1%
1/’22 : 62.48: 69.32: +10.9%  21.44: 24.16: +12.7%   2.554:  2.573: +0.74%/ +8.10%

INFLATIONARY PRESSURE, Year-on Year
Assuming UNCH, from Year End’22 levels:
YE22: USO:  70.11 : =====  CRB.it: 24.63 : =====   UnGL: 2.478:
1/’22 : 62.48: same: +12.2%  21.44: same : +14.9’%  2.554: same : -2.98%/ +8.03%
2/’22 : 67.48: same: +3.90%  22.67: same : +8.63%  2.933: same : -15.5 %/ -2.16%
3/’22 : 74.12 : same: - 5.41%  25.42: same : - 3.11 %  3.151 : same : -21.4 %/ -9.97%
4/’22 : 77.16 : same: - 9.14%  27.85: same :  - 11.5%   3.442: same:  -20.0 %/ -13.5%
5/’22 : 85.47: same: -18.0%  28.33: same :  - 12.4%  3.916:  same: -36.7 %/ -22.4%
6/’22: 80.35: same: -12.7 %  26.53: same :   - 7.16%  3.536:  same: -29.9 %/ -16.6%
Ye>6’22    USO: +14.6%.    :      CRB: + 35.8%  .      :    UnGL:   58.7%.     == +36.4%
7/’22: 78.05: same:  -10.2%  27.38:  same : - 11.0%   3.113:   same: -20.4 %/ - 13.9%
====

[drbubb]

"ANY MORON with a Spreadsheet..." (at 33-34 mins in)

...Can see if the Fed pivots in May, as the market now expects, they will run smack into unfavorable year-on-year Inflation comparisons.

The MATH shows the headline inflation rate should go to 2% by May-June.

(Right.  But the Fed often acts as if they do not run those spreadsheets. haha.)

Right now the market is not believing the Fed will stay strong.

Don't Be Fooled: A Hard Landing Lies Ahead For The Economy (And Markets) | Stephanie Pomboy

 

 

[drbubb]

CRB.it/ Comm.RB Idx. 1/'21: YTD: 10d/: $23.47,-20.5% off Yr.H: $29.52 . 2.10.23

[drbubb]

UNL/ Unleaded Gasoline. 1/'21: mid'21: Ytd: 10d/: $2.54,-41% v.Yr.H: $4.326 FX-10d

1/'21: mid'21: Ytd: 10d/: $2.54,-41% v.Yr.H: $4.326 FX-10d

Ratio at 14.16X, looks set to Rollover:  Lower rates ahead?

[drbubb]

Phl Inflation soars to fresh 14-year high

The consumer price index jumped 8.7% in January, the Philippine Statistics Authority (PSA) said on Tuesday, well above the 7.6% median estimate in a BusinessWorld poll conducted last week and the 7.5% to 8.3% forecast range given by the Bangko Sentral ng Pilipinas (BSP).

January’s headline inflation was the fastest in over 14 years or since the 9.1% uptick recorded in November 2008. It also marked the 10^th consecutive month inflation was above the BSP’s 2-4% target range. 

Month on month, inflation climbed to 1.7% from 0.3% in December. Stripping out seasonality factors, month-on-month inflation rose by 1% in January.

. . .

Mr. Mapa said inflation was also driven by faster increases in housing, water, electricity, gas and other fuels (8.5% from 7% in December) and restaurants and accommodation services (7.6% from 7%).

He noted housing rentals rose in January after being relatively stable during the pandemic, as landlords adjusted rates to reflect the economy’s reopening. This brought the annual inflation of housing rental to 5%, along with electricity (22%) and water rates (6.6%).    

Higher rents would likely affect overall inflation for the whole year since landlords usually set rental rates for at least one year, Mr. Mapa added.

> https://www.bworldonline.com/top-stories/2023/02/08/503557/inflation-soars-to-fresh-14-year-high/

[drbubb]

UNL/ Unleaded Gasoline. 2021: mid'21: Ytd: 10d/: $2.514,-42% v.Yr.H: $4.326 FX-10d

INFLATIONARY PRESSURE, Year-on Year, slows fast, after JAN's (final?) bump up
Assuming UNCH, from Latest Month End levels:
YE22: USO:  70.11 : =====  CRB.it: 24.63 : =====   UnGL: 2.478:   ====/  Aver. :  Act. : YE.est
1/’22 : 62.48: 69.32: +10.9%  21.44: 24.16 : +12.7’%  2.554: 2.567 : +0.5%/ +8.03% +6.4% +8.0 %
2/’22 : 67.48: same: +2.73%  22.67: same : +6.57%  2.933: same : -12.5%/ -2.68%:             -2.2 %
3/’22 : 74.12 : same: -6.53%  25.42: same : - 4.96%  3.151 : same : -18.5%/ -10.0%:             -10.0%
4/’22 : 77.16 : same: -10.2%  27.85: same :  - 13.2%   3.442: same: -23.4%/ -15.6%:             -13.5%
5/’22 : 85.47: same: -18.9%  28.33: same :  -14.7%   3.916:  same: -34.4%/ -22.7%:            -22.4%
6/’22: 80.35: same: -13.7 %  26.53: same :  -8.94%  3.536:  same: -27.4%/ -16.7%:             -16.6%
===
YE’22>1’23     USO:  -1.13%. :          CRB: - 1.91%      :       UnGL:  +3.59%.       : +0.18%
7/’22: 78.05: same:  -11.2%  27.38:  same : - 11.8%   3.113:   same: -17.5 %/ - 13.5%:            -13.9%

[drbubb]

Hawkish Fed forward guidance pressure gold lower - at 50%, 61.8% Target?

Gary Wagner, KITCO. Wed. Feb. 15, 2023

Gold continues to trade under pressure moving to lower prices after yesterday’s CPI report for January indicated that inflation declined to 6.4% year-over-year. January’s CPI report came in lower by 6.4% year-over-year, than the prior month of December. However, analysts were expecting a larger decline with expectations that yesterday’s report would come in between 6.2% and 6.3%. When combined with last week’s unexpected jobs report the collective information will allow the Federal Reserve to maintain its aggressive stance which means more interest rate hikes, and that rates will remain elevated longer.

Chairman Powell has been resolute in his commitment to keeping higher rates elevated throughout the entire calendar year. Market participants are beginning to accept the high probability that the Fed will take rates to between 5.1% and 5.2% and keep them elevated with no rate cuts in 2023.

Bullish factors are outweighed by immediate concerns about inflation and rate hikes

While gold has traded under pressure there are bullish undertones that at some point could come into play. The dollar has been gaining strength when compared to other currencies, but for Americans, the dollar's purchasing power continues to be diminished, a byproduct of higher levels of inflation. The national debt continues to grow and the United States has reached its debt limit which means that the government will have to raise the debt ceiling which means that the United States will grow its national debt to a higher level.

Another factor pressuring gold lower is that recent data has suggested that the Federal Reserve could modify its current rate target of 5.1% to closer to 6% to accelerate the process of reducing inflation.

Gold intrinsically benefits from higher levels of inflation and higher interest rates are detrimental. This is because gold does not generate a yield which makes US treasuries and other interest-bearing assets more favorable.

Although this is a headline-driven market and current headlines have had a hard impact that took gold prices lower technical indicators will come into play at the point in which investors believe that gold is becoming oversold and more valuable than current pricing.

Our technical studies indicate that it is highly probable that gold will trade to $1815 before finding technical support. This is based upon a Fibonacci retracement of 61.8%.

[drbubb]

TYX / US 30 Year Bond rates. ... 3yr: 1yr / Last: 39.42 = 3.942%, Range: 20.70 to 44.25

TNX / US Ten Year Note rates . 10yr; 3yrL: 1yr: 10d: Last: 38.43 > 3.843%  Range: 16.82 to 43.33

10yr;

Q: HAVE RATES PEAKED?

VIBER CHAT - in answer to a Question about whether ST rates have peaked, I wrote:

"Short term rates in the US and Phl, are still under upwards pressure.  I think that upwards pressure may ease within the next month or so.  ( My view may be wrong, of course, but I am now betting/ investing on the notion that LT rates in the US have already peaked...  back in Oct.2022, when. 30 yr rates hit. 4.36%,  and the 10yr Note hit. 4.425%".  ...   

 Look at the chart above (TYX- is 10x the 30 yr Bond rate, and TNX - is 10x the 10 year Note rate.).

>  Scroll down for charts and Historical datas > PHL REIT thread, pg2 :

 

[drbubb]

RATE PEAKS came at different times.

The longer term the Treasury instrument, the earlier it peaked, starting in Oct.2022

RATE outlook: "I think that upwards pressure may ease within the next month "

The 2 year Note may have peaked yesterday/Fri. at 4.71% (versus the Nov. peak of 4.80% intraday)

3mo.:

1 yr. :

2 yr. : x

10 yr.:x

30 yr.:

===