Market Update 16 Aug 2013: Bond Breakdown
Currency, bond, and equity markets (other than gold stocks) were lower this week, while commodities were mixed. Crude oil's fall accelerated, while silver rocketed higher. But the most important price action this week was in the collapse of the long bond.
Government-issued currencies were sharply lower, with the Japanese Yen leading the way, falling 5.8%. The USD closed at 22.7 mg, down 4.4%, now 46.6% above its half-life curve. Bitcoin, the free market internet currency, rose 1.6% to close at 2.49 g.
Bonds were sharply lower, with the short term SHY falling 4.5% with the underlying USD, while the long term TLT was crushed, losing 7.9% to close at 2.35 g. This is a decisive breakdown for the long bonds, punching down through long term support, and closing below its 200 day moving average. We may see a retest of the old support around 2.55 to see if it has now become resistance.
Most stocks were lower, led by the Dow Jones Industrials, which lost 6.5%, while the S&P 500 dropped 6.4%. The HUI Gold Bugs Index was the only equity index in the black, roaring ahead 7.9% to close at 6.2 g after hitting a high of 6.47 g on Thursday. It is looking more and more like the bottom is in on mining stocks, but there is still resistance overhead at 6.8 to 7.0 g.
The biggest commodity winner this week was Silver, which rose 7.5% to 0.519 g/oz, just below resistance at 0.525 g.
Platinum lost 2.3% to close at 34.6 g/oz, now 11.3% above gold parity.