Bull In A China Shop Or Canary In A Coalmine? (Chapter II)
Quick follow ups to the " Bull in a China shop" or "Canary in a coalmine piece from 2 days ago. Bull In A China Shop Or Canary In A Coalmine?
As mentioned in that piece the initial reaction is likely to be "Bull In A China Shop" and that is what is happening and likely to continue for now.
-China 10-year yield up 5 bp's today {GCNY10YR Index} as they talk large fiscal stimulus and supporting the property market . A weekly close above 2.06% would be an outside week and suggest an extension towards 2.26%
The 2-year yield stays suppressed {GCNY2YR Index} leading to a steepening of the 2's 10's curve overnight {GCNY10YR Index-GCNYYR Index}. Suggests that this may take some time to work if at all?
-HSCEI Index {HSCEI Index} up strongly just shy of 5% It has also broken resistance and the inverted head and shoulders at 6,970-6,986 targeting a move towards 9,000+
The CSI 300 Real estate index {SH000952 Index} up over 9%. That also now how a potential triple bullish momentum divergence on the monthly chart AND a bullish outside month over 2,999 suggesting it could go much higher.
"A rising tide lifts all ships" and Global markets have also reacted to this overnight
USDCNH {CNH Curncy} has broken below the psychological 7.00 level with the target remaining at least the 200-week MA at 6.8450 and possibly 6.70
CNHJPY {CNH Curncy} also still has an outside chance of a bullish outside month on a monthly close over 20.8035 and the bullish outside week on {JPY Curncy} was followed by a bullish outside day yesterday.
As in 20222-2023 when we got some of these moves Oil {CL1 Comdty} does not seem to be able to be a main beneficiary and failed to break over good resistance at $72.50 to $73.50. All its bids whether they be geopolitical seemed doomed to fail. While we did not get a higher level on the week on WTI we did on Brent {CO1 Comdty} and could see a bearish outside week on a close below $71.52
Gold {XAU Curncy} and Bitcoin {XBTUSD Curncy} were clear beneficiaries also overnight and in particular watch pivotal resistance at $65,030 on Bitcoin above which on a weekly close would target $78k+
Copper {HG1 Comdty} also moved higher with first good resistance close by at $450 and above here $468
