July Report: Precious Metal Technical Analysis
18 July 2022
US real yields via the US 10-year TIPS continued higher – much higher- to make a high so far of 0.877 pct. Yields have come off slightly but the macro theme is still aggressive monetary tightening with the potential for a recession – which means markets are now pricing in lower US rates from the second half of 2023. The volatility of ‘expectations’ around the degree of nearby tightening is intense, and probably tells you more about asset markets now than almost anything else.
China had a serious miss in Q2 GPD at 0.40 %. Import growth slowed to 1%. There are signs that the property crisis is now spreading to the banking sector directly (not just via fixed income and defaults) via fearful retail depositors at the regional bank level. What if the ‘mortgage payment strike’ spreads more widely?
The AUD may take some comfort from China taking our coal, but iron ore prices in Dalian send a negative signal and recession fears should keep the AUD on the defensive.