The day

Wrap

The reflation narrative seems to be taking off:

• DXY down, to 90.87,
• 10Y Treasury up to 1.63%,
• virtually all commodities up: GSCI up 0.75% today, 20% YTD. Except gold, stuck on $1776/oz,
• equities generally flat. Blowout numbers from GOOG, up 3.6%, could not support the rest of the market.

Tweets

pic.twitter.com/TmJAqnAPM5

— Cold War Steve (@Coldwar_Steve) April 27, 2021

this https://t.co/Y1SWreftd9

— ForexLive (@ForexLive) April 27, 2021

Deluard

Vincent Deluard of Stonex is always worth listening to on The Market Huddle. He was on last week arguing that:

• China and satellites suppressed their currencies in the 90’s to keep their large young populations employed,
• China imposed capital controls to prevent the sort of situation which occured in Japan in the 80s, which resulted in decades of pain,
• these trends will reverse in the coming decade, resulting in Chinese assets, and currency appreciating, to allow the retirees to spend in their dotage,
• this is essentially the ‘Great Moderation’ run in reverse, with 1bn productive young workers taken out of the global labour force,
• the loss cheap productive capacity will result in inflation,
• East Asian assets, of all sorts will go up (but watch out for equities, and China repression),
• this inflation will spread to the West,
• some LTAM assets will be worth looking at as they are long real and short dollar exposure: e.g. BRL, CLP.

Worth thinking about.