Macro Extremes (week ending January 24, 2025)

A weekly Macro, Cross Asset review of prices trading at extremes which may generate future investment ideas and opportunities.

The following assets (on a weekly timeframe) either registered an Overbought or Oversold reading and/or have traded more than 2.5 standard deviations above or below its rolling mean.

* denotes multiple week inclusion

Extremes above the Mean (at least 2.5 standard deviations)

Cattle *

Corn *

EUR/GBP

Austria’s ATX *

France’s CAC Index

Italy’s MIB Index *

Sweden’s OMX Stockholm Index

Philly’s SOX 

And the U.K.’s FTSE 100 *

Overbought (RSI > 70)

Japanese 2, 5 and 10 year government bond yields

Arabica Coffee *

Urea (U.S. Gulf price) *

Gold as priced in AUD, CAD, CHF, EUR and GBP

USD/INR

Hungary’s BUX Index *

Pakistan’s KSE Index *

Czech Republic’s PX Index *

Israel’s TA35 *

The Overbought Quinella (Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)

Germany’s DAX Index *

Chile’s IGPA and IPSA equity indices *

Extremes below the Mean (at least 2.5 standard deviations)

Turkish 10 year government bond yields

GBP/EUR

Oversold (RSI < 30)

Chinese 10 year government bond yields * 

U.S. 3 month government bill yield *

Australian Coking Coal *

Richards Bay Coal *

Newcastle Coal *

North European Hot Rolled Coil Steel *

U.S. Midwest Hot Rolled Coil Steel *

Lithium Carbonate *

Lithium Hydroxide *

AUD/THB

INR/USD *

The Oversold Quinella (Both Oversold and Traded at < 2.5 standard deviations below the weekly mean)

None 

Notes & Ideas:

Government bond yields were mixed and subdued.

All of the bond yields which appeared in last week’s overbought categories are not there this week.

The Euro 10 year yield and the US10/2 yield spread broke their 6 week run of higher closes.

Spanish, French, Italian, Dutch and Portuguese 10 year bond yields broke their 5 week rising streak. 

While the Turkish 10 year bond yield has fallen for 5 straight weeks.

Equities had a another good week.

All the notable gainers appear in the ‘advancers’ list below, with no decliners listed.

Taking risk is being welcomed. 

Austria’s, Hungary’s, South Korea’s, Spain’s and Switzerland’s main equity indices are in a 5 week winning streak. The latter has risen 8% over that time.

Notably, the CAC and DAX have risen 7.5% over the past 3 weeks.

The Czech Republic’s PX Index has risen for 8 consecutive weeks and for 17 of the past 19 weeks.

Israel’s Tel Aviv 35 Index broke its 8 week winning streak. It has closed higher for 13 of the past 15.

The DAX is at an all-time high.

While the AEX, FTSE 100, Nasdaq Transports and Norway’s OBX broke their 4 consecutive weeks of gains.

The Nikkei 225 rose and has nearly recovered the loses of the past 3 weeks,

And the U.S. biotech index had a good week.

Commodity prices were mostly higher.

Last week, the 3 major commodity indices were registering overbought ‘extremes’.

This week, they are not.

Oil and Distillates dragged those indices lower and many broke their 4 week winning streaks. Furthermore, none of them traded higher than last weeks high as they all dropped out of overbought territory.

Coffee, Palladium Gases and Cocoa were majors winners for the week.

Corn has risen for 7 of the past 8 weeks and features prominently as an ‘overbought extreme’.

Cattle prices are at their highest since November 2014.

Orange Juice is in a 5 week losing streak.

The Baltic Dry Index has fallen 84% over the past 4 months.

Coal prices remain in oversold territory.

Gold as priced in CAD has risen for 8 consecutive weeks, 

Gold in USD has risen for 4 weeks while Gold in CHF is in a 5 week winning streak.

Sugar has fallen for 13 of the past 16 weeks.

U.S. Midwest Hot Rolled Coil Steel is in a 4 week losing streak and has spent 35 weeks being oversold,

while Lithium Hydroxide has now lingered in weekly oversold territory for 86 consecutive weeks.

Currencies were quiet compared to past weeks.

The DXY (USD) Index fell and it’s no longer overbought. It took all last weeks oversold currency pairs with it.

The AUD was stronger again.

The Brazilian Real has risen for 4 straight weeks versus the USD.

The Loonie was weaker against everyone except the USD.

The Euro was stronger and was the British Pound.

EUR/USD isn’t oversold anymore as its 2% higher since the oversold extreme cited 2 weeks ago.

The Swiss is firmer as the CHF/JPY broke a 4 week losing run.

And so, the Yen was weaker everywhere.

The larger advancers over the past week comprised of;

Cocoa 3.8%, JKM LNG 2.4%, Arabica Coffee 5.9%, Cattle 2.8%, JKM LNG in ¥ 3.7%, Tin 1.3%, Natural Gas 2%, Palladium 4.4%, Robusta Coffee 10.8%, Sugar 4.4%, Dutch TTF Gas 6%, Soybeans 2.1%, All World Developed ex USA 3%, ATX 1.7%, CAC 2.8%, DAX 2.4%, DJ Industrials 2.2%, HSCEI 2.9%, Hang Seng 2.5%, IDX 1.6%, Russell 2000 1.4%, TAEIX 1.6%, Nasdaq Composite 1.7%, Mexico 2.8%, Nasdaq Biotech’s 4.1%, Nasdaq 100 1.6%, Copenhagen and Helsinki rose 1.5%, Stockholm 2%, PX 2.6%, SMI 2.5%, S&P 500 1.7%, TSX 1.6%, WIG 2.6% and the ASX Financials rose 3.1%.

The group of largest decliners from the week included;

Australian Coking Coal (1.7%), Baltic Dry Index (21.2%), Brent Crude Oil (2.9%), WTI Crude Oil (3.5%), DXY Index (1.8%), Heating Oil (4.4%), Lumber (5%), Nickel (2.8%), Gasoline (3.2%), Gasoil (4.2%) and Uranium fell 3.8%. 

January 26, 2025

By Rob Zdravevski

rob@karriasset.com.au