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July 25, 2015 | Market Talk – July 25th, 2015

Martin Armstrong

Martin Arthur Armstrong is the former chairman of Princeton Economics International Ltd. He is best known for his economic predictions based on the Economic Confidence Model, which he developed.

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Commodities and their currencies continued to suffer this past week to complete what has been probably the worst week in a very long time. Oil lost another 1% leaving TWI at $47.95 whilst Brent lost 1.5% last seen at $54.45. Natural Gas is still unable to show any signs of recovery and it was last trading at 2.785(another 1% drop). Commodity based currencies (A$, Rouble, C$ etc.) all had very bad days with the worst being the Russian Rouble down on the day -2.35% at one stage.

Asian equities closed weaker on the Friday as Europe followed suit and late this evening the US markets were also heading into negative territory. The Dow has still been unable to make new highs in dollar terms, but the underlying support has come from foreign investors on a currency play.  Even the huge rally seen in Amazon was not enough to turn the stock market positive by the end of the day, yet Amazon is demonstrating the technology shift as it goes toe-to-toe with WalMart for the title of biggest sales organization. The flight to quality continues in the bond market and the US Treasury curve continues to benefit as money leaves the stock market.

The 2yr Note was last trading -1.6bp at 0.678% whilst 10’s and 30’s were trading 2.26 and 2.96 respectively. The spread US/Germany TY/RX spread was unchanged at 156bp.

Few traders starting to talk JGB yields again as the Western economic numbers start to disappoint! Just when a number of houses were building short positions the bond market turns positive and closes its best week in months.

The weekly close in Gold saw the key Bearish Reversal at 1084 hold for now, but this is the line of demarcation. A weekly and month-end closing beneath this should signal we will break the $1000 barrier and test the 1980 high of $875 to $904 level. Copper was also a talking point down to its lowest level in 6 years.

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July 25th, 2015

Posted In: Armstrong Economics

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