Macro Extremes (week ending February 21, 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.

n.b. pricing of (commodity) futures contracts is only considering the immediate front month.

* denotes multiple week inclusion

Extremes above the Mean (at least 2.5 standard deviations)

Swiss and Czech 10 year government bond yields 

Bloomberg Commodity Index *

Natural Gas 

JPY/CAD

Amsterdam’s AEX Index

Stockholm’s OMX Index

Overbought (RSI > 70) 

Japanese 2 & 5 year government bond yields *

Arabica Coffee *

Urea (U.S. Gulf price) *

Gold in AUD, CAD, CHF, GBP and ZAR *

Hungary’s BUX Index *

Czech Republic’s PX Index *

Switzerland’s SMI Index

Chile’s IPSA and IGPA Index *

Singapore’s Strait Times Index *

And Israel’s TA35 *

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

Japanese 10 year government bond yield *

Gold as priced in USD *

Austria’s ATX *

Germany’s DAX Index *

Italy’s MIB *

HSCEI Index *

Hang Seng

Poland’s WIG Index *

And Spain’s IBEX Index *

Extremes below the Mean (at least 2.5 standard deviations)

NZD/AUD *

Oversold (RSI < 30)

U.S. 3 month government bill yield *

Australian Coking Coal *

Richards Bay Coal

North European Hot Rolled Coil Steel *

Lithium Carbonate *

Lithium Hydroxide *

Newcastle Coal *

Uranium *

Thailand’s SET Index

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

Orange Juice *

Notes & Ideas:

Government bond yields rose, again.

All rose except Eurozone and U.S. bond yields.

Chinese 10 year bond held rose enough that it’s no longer oversold.

U.S. 7’s & 10’s have fallen for 6 weeks.

The U.S. 10 year and 5 year real interest rate has declined for 6 straight weeks.

Chile’s 2 year bond yields broke their 6 week rising streak.

While the Japanese 10 year bond yield has climbed for 7 weeks.

Equities were active again.

The All Developed World ex USA Index broke its 5 week winning streak.

The CAC, DAX and IGPA snapped their 6 weeks of consecutive advance.

Italy’s MIB and South Africa’s SA40 have risen for 4 consecutive weeks.

Helsinki’s 25 Index has climbed for 6 weeks.

Austria’s ATX broke their 8 week winning streak, while Hungary’s BUX, Poland’s WIG and Spain’s IBEX have extended their advance to 9 weeks straight.

The Hang Seng and the HSCEI have both registered an overbought quinella.

The latter has climbed for 6 consecutive weeks.

And Switzerland’s SMI has climbed for 8 of the past 9 weeks.

Commodity prices were mixed with a lower bias, again.

Gold, Aluminium, Sugar, Tin and Oats had a good week.

Coal, Cocoa, Pork, Orange Juice, Uranium, Gases Copper, Platinum and Rice fell.

The Bloomberg Commodity Index remains in overbought land.

U.S. Hot Rolled Coil Steel has climbed for 4 weeks and Sugar has done so for 5.

Silver in USD has risen for 5 straight weeks and 7 of the past 8. Furthermore, I’m watching for a confirmation of a trend continuation.

Gold in CAD hasn’t registered a weekly decline for the past 12 of them.

Gold in USD is in a 8 week winning streak. 

Arabica Coffee broke its 6 week winning streak.

Orange Juice tanks further, extends its losing streak to 9 weeks, registers an extreme oversold reading and heads towards mean revision. 

Australian Coking Coal prices have sunk for 7 straight weeks.

Uranium and Cattle are in 4 week losing streaks.

Brent Crude and WTI Crude have fallen for 5 straight weeks. 

Lean Hogs broke their 4 consecutive weeks of advance,

Wheat broke its 6 week winning streak.

Corn has risen for 9 of the past 12 weeks and is approaching overbought levels.

Tin prices have soared 12% over the past  weeks.

while Lithium Hydroxide has now lingered in weekly oversold territory for 90 consecutive weeks.

Currencies acted normally,

With the exception of the Yen, which rallied 2% against everyone.

The AUD mostly rose, again, except agains the Yen.

The Brazilian Real broke its 7 straight week advance versus the USD.

The Chilean Peso broke its 6 straight week rising streak against the USD.

The Loonie was mostly lower, again.

The Euro was weaker.

The British Pound was mostly higher 

And the Swiss Franc was stronger.

The larger advancers over the past week comprised of;

Aluminium 3.1%, Baltic Dry Index 23.9%, Lumber 2.1%, Tin 4.6%, Natural Gas 13.7%, Sugar 4.4%, Sugar #16 3.3%, Gold in AUD 1.8%, Gold in CAD 2.1%, Gold in CHF 1.7%, Gold in EUR 2.2%, Gold in USD 1.8%, Gold in ZAR 1.9%, Oats 6.4%, Egypt 3.1%, HSECI 4%, Hang Seng 3.8%, TAIEX 2.5%, KOSPI 2.5%, NBI 1.5%, Copenhagen 2.3%, Vietnam 1.6%, IDX Composite 2.5% and the IBB ETF rose 1.7%.

The group of largest decliners from the week included;

Richard Bay Coal (2.4%), Cocoa (11.5%), Lean Hogs (5.3%), Copper (2.2%), JKM LNG (6.4%), Arabica Coffee (4.5%), JKM in Yen (8.3%), Newcastle Coal (1.8%), Orange Juice (8.3%), Palladium (1.8%), Platinum (3.1%), Gasoline (2.2%), Dutch TTF Gas (6.9%), Uranium (1.6%), Rice (2.4%), Wheat (1.6%), KBW Bank Index (3.5%), DJ Industrials (2.6%), DJ Transports (3.5%), S&P Small Cap 600 (3.5%), Russell 2000 (3.6%), Nasdaq Composite (2.5%), KRE Regional Banks Index (3.9%), S&P Midcap 400 (3%), Nasdaq 100 (2.3%), SET (2%), S&P 500 (1.7%), Nasdaq Transports (4.2%), ASX Financials (7.5%), BIST (2.8%) and the ASX 200 fell 3%.

February 23, 2025

By Rob Zdravevski

rob@karriasset.com.au