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Monday's Market Minute: When Everything Just Doesn't Add Up…Gold Rallies

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Monday's Market Minute: When Everything Just Doesn't Add Up…Gold Rallies

While a dovish Fed and what appeared to be progress on trade talks with China helped the U.S. indices lift to new all-time highs in the month of July, the sentiment shifted suddenly and dramatically in reaction to news of a new 10% tariff on billions of Chinese goods to be added in September.

The focus is now on the Yuan, to levels we haven’t seen in 12 years, in what’s being seen as the Chinese weaponizing their currency. Under these circumstances, as you would expect to see, many investors are seeking safe-haven assets to shelter from the storm tied to the trade war escalating in the last week or so and the recent dip in the Yuan. Treasury futures products are up: bonds are to levels we haven’t seen since November of 2016. Gold is rallying, as you’d expect, to new highs for the year and levels we haven’t seen since the spring of 2013. The VIX is back up around 20, and don’t forget about the Yen – it just posted a new high for the year.

Risk off sentiment gone wild is what we’re seeing and we have potential to see a big week. Keep an eye on headline news and some of the risk-off assets tied to U.S./China trade talks, Fed speakers, and economic data throughout the week.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

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Posted-In: Gold TDAmeritrade US-China Trade WarNews Global Markets General

 

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