Long Bonds Rally
US Bonds were higher this week, recouping last week's losses and more. SHY gained 3.1% in line with USD strength, and TLT gained 6.4% reversing last week's 2.1% loss. Over the longer term, TLT is now up for the year, while SHY is down around 20%. As the crisis in Europe deepens, US Treasuries may make further gains; but keep in mind that these are highly volatile speculations, not a safe place for your savings or a good source of income.
All the major currencies bounced this week, though they are still down YTD and for the last year. The weakest was the EUR (recovering 2.4% of last week's 2.6% drop) reflecting hopes that the crisis in Italy and Greece has been resolved. I am not holding my breath. JPY was the strongest, up 4.1%.
Stocks were mixed this week, with the Dow up 0.1%, the S&P 500 down 0.8%; gold stocks as measured by HUI were down 5.4%. Japanese stocks were slightly higher, with the Nikkei up 2.4%. All four indices are much lower YTD and from one year ago, with the Nikkei leading the way, down 29%.
The Dow and the S&P 500 remain below their lows of 2009 (3.2% below and 2.4% below respectively) in spite of their nominal "gains" when measured in ever depreciating dollars. Japanese stocks are more than 20% lower. Gold stocks, which bottomed in late 2008 at 6.45g, are now trading 64% higher at 10.6g.
Commodities were mixed, with crude oil and coffee rising again this week. Copper regained some of last week's loss, up 3.8% this week. Silver and cotton each declined 1.5% for the week.
All the commodities on our list are lower YTD and compared to a year ago, with cotton showing the most weakness (down about 45%) while silver and crude oil show the least.
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