What's going on in the MOST important market world-wide currently?
Let's have a look at commodity markets! A thread 1/n
Let's have a look at commodity markets! A thread 1/n
Commodities are up broadly speaking. Energy, the evergreen of 2022, is up – oil and refined petroleum products in particular.
Even if Nat Gas prices have come down hard in Europe due to filled storages and hence an ease in spot pressure, prices are up in the US
2/n
Even if Nat Gas prices have come down hard in Europe due to filled storages and hence an ease in spot pressure, prices are up in the US
2/n
Sentiment/positioning remains long – quite materially – in most commodities.
The odd fellow in energy space remains natural gas. A commodity that the market agrees, measured on positioning, is overpriced.
3/n
The odd fellow in energy space remains natural gas. A commodity that the market agrees, measured on positioning, is overpriced.
3/n
Softenings of the USD and bond yields have offered gold and silver some respite.
Silver surged roughly 8% and gold nearly 3% after the weak PMIs last week - most likely mostly due to the slide in bond yields.
4/n
Silver surged roughly 8% and gold nearly 3% after the weak PMIs last week - most likely mostly due to the slide in bond yields.
4/n
Bank Of Englands Yield-Curve-Control ought to be THE biggest signal seen in recent years that a bit of exposure towards gold and/or silver is a decent natural addition to almost any portfolio construction
Surpressed real yields = precious metals up!
5/n
Surpressed real yields = precious metals up!
5/n
As PMIs approach <50 territory, industrial metals – closely correlated to economic activity - are DOWN. Conversely, people have turned to precious metals. A classic store of value.
This is a decent spread trade ahead of the winter.
Long precius vs. industrial metals!
6/n
This is a decent spread trade ahead of the winter.
Long precius vs. industrial metals!
6/n
As my friend Bem Melkman brilliantly advocated on "The Macro Trading Floor" podcast on the 4th of September, China has ramped up their imports of gold – likely as safeguarding in response to the freeze of Russian USD-accounts.
Seems like his trade is beginning to play out
7/n
Seems like his trade is beginning to play out
7/n
The OPEC+ meeting in Vienna led to considerations around the largest production cuts since 2020 and the front-end versus belly of the oil futures curve has been bid up relative to a month ago again..
This is bullish for spot oil prices short-term..
8/n
This is bullish for spot oil prices short-term..
8/n
Natural Gas prices, on the other hand, drop like a stone in Europe, as storages have been filled up AHEAD of schedule in Europe..
Beware of a reversal of this pattern after the 1st of November when the heating season kicks in
9/n
Beware of a reversal of this pattern after the 1st of November when the heating season kicks in
9/n
The bottom-line is the following
1) Precious metals love BoEs yield-curve-control
2) Industrial metals underperform due to weak growth / recession risks
3) Oil supply is likely going to be cut
4) Nat Gas prices will likely re-increase after 1st of November
10/n
1) Precious metals love BoEs yield-curve-control
2) Industrial metals underperform due to weak growth / recession risks
3) Oil supply is likely going to be cut
4) Nat Gas prices will likely re-increase after 1st of November
10/n
I remain short Commodities broadly (which has performed VERY well for me), but I consider the following spread-trades for Q4 instead:
1) Long precious metals vs. short industrial metals
2) Long Nat Gas vs. Oil
Follow my FREE newsletter for more
11/n
andreassteno.substack.com
1) Long precious metals vs. short industrial metals
2) Long Nat Gas vs. Oil
Follow my FREE newsletter for more
11/n
andreassteno.substack.com
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