Markets signal: A drama in three parts

also, startling political change elsewhere

“The prevalence of surprise in the world of business is evidence that uncertainty is more likely to prevail than mathematical probability.” – Peter L. Bernstein ||  

Hi everyone! I hope you all had a great weekend – here in Europe, we got a whole extra hour of it! That’s also why this email is landing later for those of you who have not turned clocks back yet.

On Friday night, I had a great chat with Maggie Lake on her new show Talking Markets, you can see that video here. While you’re at it, subscribe to her Substack! You’ll get strong insight honed by decades of covering markets, given even more sparkle by her style and her guests.

Below, I look at the story markets are telling, in three acts.

Programming note: it’s a holiday here on Friday (All Saints’ Day), so this newsletter will be taking a break.

IN THIS NEWSLETTER:

• Markets signal: A drama in three parts

• Startling political change

• It’s a sign

If you’re not a premium subscriber, I hope you’ll consider becoming one!

WHAT I’M WATCHING:

Markets signal: A drama in three parts

Like a sophisticated play or novel, macro markets are currently dominated by two divergent stories being told by a colourful cast of characters:

We have US treasuries – one of the world’s most trusted “safe haven” assets – falling in price, and on track for one of their worst months in recent years. The two-year treasury note is at its lowest since September 2022.

(chart via TradingView)

And we have gold – another globally trusted “safe haven” asset – climbing to all-time highs.

(chart via TradingView)

So, one old-school safe asset is falling, another is climbing. What’s going on? Which one is right?

In markets, there’s rarely a “right” and “wrong”, since everything relies on 1) starting point, 2) timeframe and 3) expectations. Something has shifted in all three.

Act 1: suspicion builds