Five Hundred Words 11/29/2018

Thursday, November 29, 2018

Daily Writing

9:01 AM

Earlier this morning the price of oil dropped below $50 per barrel.  Where is the bottom?  What impact will this have on the US shale industry?

The headquarters of Deutsche Bank was raided by police today as part of a money laundering probe.[1]

The yield of the US 10-year Treasury Note dropped by three basis points since yesterday following Fed Chairman Jerome Powell’s announcement that interest rates appear to be nearing “neutral.”[2]  This development reignited bullish sentiment in equities markets as the SPY closed 2.20% higher.  The yield on the US 10-year is down to 3.02%, however the yield on the longer term 30-year hasn’t budged.  Why are shorter term interest rates more impacted?

I didn’t quite realize the impact Powell’s words would have on short-term rates.  I still don’t quite understand why Fed intervention has greater impact on the yields of shorter-term Treasuries (7-10 years).

We are working on building our portfolio around several positive carry trades.  Notably, equities which pay a sizeable dividend are quite attractive.  We will focus on compounding capital, that is the key here.  We’d like to avoid assets with high expense ratios, such as leveraged ETFs.

Citations

https://www.golddealer.com/gold-to-silver-ratio/

https://www.fastmarkets.com/commodities/base-metals/news/1

https://www.bloomberg.com/news/articles/2018-11-29/deutsche-bank-headquarters-searched-in-money-laundering-probe?srnd=premium

https://www.ft.com/content/221b509e-f32d-11e8-ae55-df4bf40f9d0d

 

 

Market Data

Resource Commodities

 

November 29, 2018

November 28, 2018

November 27, 2018

November 26, 2018

November 20, 2018

Gold Spot

1220.70

1214.60

1221.60

1222.80

1224.55

Silver

14.285

14.120

14.190

14.250

14.405

Gold/silver

85.39

86.13

85.81

85.86

NA

Platinum

822.00

831.00

842.00

841.00

847.00

Copper

2.7955

2.75

2.73

2.72

2.80

Crude(WTI)

51.07

51.23

51.58

51.91

56.23

 

Global Government Bond Yields

 

November 29, 2018

November 28, 2018

November 27, 2018

November 26, 2018

November 19, 2018

US 10 year

3.02%

3.06%

3.07%

3.07%

3.04%

US 30 Year

3.33%

3.33%

3.32%

3.38%

3.29%

UK

1.34%

1.37%

1.39%

1.41%

1.39%

Germany

0.32%

0.35%

0.35%

0.36%

0.35%

Brazil

10.05%

10.08%

10.10%

9.97%

10.10%

Italy

3.22%

3.26%

3.25%

3.25%

3.60%

Japan

0.08%

0.09%

0.08%

0.08%

0.09%

[1] https://www.bloomberg.com/news/articles/2018-11-29/deutsche-bank-headquarters-searched-in-money-laundering-probe?srnd=premium

[2] https://www.ft.com/content/221b509e-f32d-11e8-ae55-df4bf40f9d0d

 

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