Yield Curve Inversion Pushes Copper Prices Lower
March 27, 2019 10:41 amVideo
Latest News
- Trading Signals for GOLD (XAU/USD) for April 17-19, 2024: sell below $2,400 (21 SMA – double top) April 17, 2024
- Technical Analysis – GBPCAD hits a wall but bulls not ready to give up April 17, 2024
- Trading Signals for Ethereum (ETH/USD) for April 17-19, 2024: sell below $3,125 (21 SMA – 2/8 Murray) April 17, 2024
- Analysis for the EUR/USD pair on April 17th. Jerome Powell didn’t help the dollar much April 17, 2024
- Analysis for GBP/USD pair on April 17th. British inflation overtakes American inflation April 17, 2024
- USD/JPY: Simple Trading tips for novice traders on April 17th (US session) April 17, 2024
- GBP/USD: Simple trading tips for novice traders on April 17th (US session) April 17, 2024
- EUR/USD: Simple trading tips for novice traders on April 17th (US session) April 17, 2024
- GBP/USD: trading plan for the US session on April 17th (analysis of morning deals) April 17, 2024
- Technical Analysis – EURUSD takes a breather after sharp tumble April 17, 2024
- Market continues to price in a plethora of rate cuts for 2024 – Special Report April 17, 2024
- EUR/USD: trading plan for the US session on April 17th (analysis of morning deals) April 17, 2024
- Technical Analysis – EURGBP maintains bearish bias amid pennant formation April 17, 2024
- EUR/USD. April 17th. Jerome Powell supports the dollar April 17, 2024
- GBP/USD. April 17th. Inflation in Britain is falling, but not as much as the market wants April 17, 2024
- Tesla Q1 Earnings: Poor deliveries point to disappointing results – Stock Markets April 17, 2024
- Video market update for April 17, 2024 April 17, 2024
- Forex forecast 04/17/2024: EUR/USD, GBP/USD, Gold, Bitcoin and Ethereum from Sebastian Seliga April 17, 2024
- Technical Analysis – Gold struggles to jump above 2,400 April 17, 2024
- GBP/USD: trading tips for beginners for European session on April 17 April 17, 2024
Copper is an important metal used
by billions of people every day. As you read this, there is some copper in your
computer or smartphone. The power that you use to charge the devices relies
heavily on the metal. Because of this importance, copper is often viewed as a
barometer for the global growth. This is because a slowdown would mean a low
demand for the metal.
It is for this reason that the
price of copper declined sharply last week. As you might observed, there was a
yield inversion in the United States. A yield inversion happens when the yield
of the short-term treasuries rises above that of the long-term. In a normal
environment, holders of long-term bonds require a higher yield because of their
patience. It’s a similar way when you provide a soft loan to your friend. If he
intends to return the money tomorrow, the interest rate will be lower compared
to if he intends to return the funds within a year. You may easily predict what
will happen tomorrow but it is almost impossible to predict what will happen
within a year. As such, on Friday, the yield of the 3-month bonds rose higher
than those of the ten-year.
When such an inversion happens,
it is usually a signal that a recession is on the way. In fact, the last time
this happened was in 2007, before the financial crisis. After the inversion,
stocks declined, the Volatility index rose slightly, and copper declined. This
week, there have been some recovery in stocks and copper as investors ponder on
what will happen next. In addition, many have downplayed the impact of the
inversion. Among them are renowned Economist, Mohamed El-Erian and the chief
economist at Citi. They argue that a recession tends to happen 12-18 months
after an inversion and between that period, a lot could happen.
After the Friday’s decline, the
CPR/USD pair has been moving upwards, although the trend has been largely slow.
The pair has risen from a low of $2.8335 to a high of $2.875. As a result of
the consolidation, the price is along the 9-day and 26-day moving averages. There
is a likelihood that the upward trend will continue a bit to the $2.885 level,
which is also the 38.6% Fibonacci Retracement level.
The post Yield Curve Inversion Pushes Copper Prices Lower appeared first on Forex.Info.
Related Posts: