Bonds confirming Doc Copper Macro (Slow Down) Message?

March 28th, 2013

by Chris Kimble

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Many view Copper as a quality leading indicator for the global economy. The weakness of late has Copper in the upper left giving a multi-year support line its biggest test in three years. Do we have a breakdown at hand and a macro message of slowness taking place? Some would say yes.

Government Bond traders are very keen on global growth … or the lack thereof. The yields on the 10-year and 30-year bonds are attempting to break support of bearish rising wedges.

A breakdown in yields would confirm the signal coming from Copper.

Who loves Government Bonds these days? The sentiment chart (left inset) reflecting bond sentiment was shared with Sector/Commodity Sentiment Extreme members a couple of weeks ago.

The chart suggests that bond bullish sentiment levels are reaching levels seldom seen over the past 7 years. I inverted yields in this chart to better illustrate the breakout in price in both the 10-year & 30-year bonds.

Does Doc Copper (and Government bonds) know something about the economy that the stock market (SPY) is not aware of? Stay tuned, this could get interesting!

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