US Treasury Yield Curve
Germany Government Bond Yield Curve
UK Government Bond Yield Curve
Japan Government Bond Yield Curve
Australia Government Bond Yield Curve
Brazil Government Bond Yield Curve
Charts courtesy of Bloomberg
Huge equity market gaps down have a tendency to be bought, but I do not care where the market closes today. Nor do I do care or whether the EU or IMF manages to pull one more preposterous "Greece will not default" attempt out of its tattered hat.
These curves are not synonymous with growth and we are not going to see growth either. Germany, Australia, and Brazil curves are inverted. Short-term yields are so low in the US and Japan that there is no room for inversion.
No Hiding Places
On September 19th I wrote No Hiding Spots Except Despised US Dollar: Equities Red, Metals Red, Energy Red, Grains Red
No Hiding Spots Except Despised US DollarCurrencies
If you have not done so already done so, please consider the possibility there will be no hiding spots except for US dollars and short-term US treasuries (yielding nothing) in a renewed strong downturn.
I expect gold to hold up in a major decline, but I could easily be wrong. One encouraging sign is the $HUI gold miner index is down less than a percent even though gold is down by 2% and the S&P and Dow are down by almost 2% as well.
Today there are indeed no hiding spots. Currencies other than the US dollar and Yen are clobbered.
Note in particular the bleak picture in the "hard" currencies of Australia and Canada. There is no reason to believe the Loonie or the Australian dollar will be a safe haven. When China slows (and it will), it will hit the commodity currencies hard.
I have been saying that for months. See Michael Pettis: Long-Term Outlook for China, Europe, and the World; 12 Global Predictions for details.
Gold, Metals Smashed
Commodities across the board are an ocean of red. I still expect gold to hold up well, at least on a relative basis. I could be wrong. There may indeed be no hiding places in this downturn.
Mike "Mish" Shedlock
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