The Euro Jumps Aboard the Bull's Train, but the Aussie Dollar Is Being a Wet Blanket
The euro-US dollar cross was finally able to conquer its short-term resistance over the last few days. But that's not the end of the story.
Emerging markets bonds are breaking support?
If the global economy is really improving, we absolutely should not only see interest rates moving higher, but also other risk “tells” like the iShares JPMorgan US Dollar Emerging Market Bond ETF (NYSEARCA:EMB). The reality, however, is that EMB is breaking and possibly closing below its reliable 14-day moving average line right now. If the weekly close in EMB is below support on Friday’s close, I wouldn’t imagine it would be that well received by risk bulls.
Click to enlarge
Conclusions from bond land:
It’s a mixed bag in bonds. First, we have the rising yields on Treasuries – which is bullish for risk assets. On the other hand, what’s the EMB doing floundering around below its key support / resistance line? The action in junk bonds is still pretty benign, so we have to remain in split-decision mode in terms of “bullish” or “bearish” messages being sent to us from bonds.
As I noted throughout this report, while it’s great to see the euro / US dollar breaking resistance – we must remember that it is short-term resistance that it’s conquering and that the overall chart for EURUSD remains in fairly bearish. Couple that dynamic with the other mixed messages we’re getting from both currencies and bonds and you get a pretty compelling argument to remain invested in risk assets, but with one foot out the door.
Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.