Macro Extremes (week ending February 28, 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 10 year government bond yields *

JPY/AUD

JPY/CAD

HSCEI Index *

Hang Seng *

Tin

Overbought (RSI > 70) 

Japanese 2, 5 & 10 year government bond yields *

Brazilian 10 year government bond yield *

Urea (U.S. Gulf price) *

Gold in AUD, CAD and ZAR *

Hungary’s BUX Index *

Germany’s DAX Index

Czech Republic’s PX Index *

Switzerland’s SMI Index

And Chile’s IPSA and IGPA Indices *

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

Austria’s ATX *

Spain’s IBEX Index *

Extremes below the Mean (at least 2.5 standard deviations)

TBX

U.S. 5 year government bond yield minus U.S. 5 year breakeven inflation rate

U.S. 5 year government bond yield minus U.S. inflation rate

U.S. 10 year government bond yield minus U.S. 10 year breakeven inflation rate

U.S. 5 year government bond yield minus U.S. 10 year inflation rate

Philadelphia SOX Index

Nikkei 225 Index

Oversold (RSI < 30)

U.S. 3 month government bill yield *

INR/USD

Australian Coking Coal *

Richards Bay Coal *

North European Hot Rolled Coil Steel *

Lithium Carbonate *

Lithium Hydroxide *

Newcastle Coal *

Uranium *

And Thailand’s SET Index *

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

Orange Juice *

Jakarta Composite Index

Notes & Ideas:

Government bond yields fell….

except for Belgian, Finland and Brazil’s bond yields.

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

As a result, the IEF bond ETF has risen for 7 weeks.

The U.S. 10 year and 5 year real interest rate entered extreme territory this week.

We saw a large fall and reversal in Swiss yields.

While the Japanese 10 year bond yield has climbed for 8 weeks.

Equities were notably weaker.

Italy’s MIB have risen for 5 consecutive weeks.

Vietnam’s main index has risen for 6 weeks.

Spain’s IBEX have extended its advance to 10 weeks straight.

Inversely, the S&P SmallCap 600, MidCap 400 and Russell 2000 have declined for the 5 consecutive weeks.

The Hang Seng and the HSCEI were registering overbought quinella prices early in the week, before they fell and broke their 6 consecutive weeks of advance.

Singapore’s Strait Times, South Africa’s SA40 and Helsinki’s 25 Index snapped their respective 4, 5 and 6 week winning streaks.

While Hungary’s BUX, Poland’s WIG broke their 9 week wining streaks.

The SENSEX and NIFTY are nearing extremes.

And Switzerland’s SMI has climbed for 9 of the past 10 weeks.

Commodity prices had a terrible week, across the board.

Tin, Corn, Wheat, Coffee, Sugar and Palladium were amongst the heaviest decliners. 

Shipping Rates, Lumber, Oasis were the few to rise for the week.

In fact, the Baltic Dry Index has soared 57% over the past 4 weeks, after registering an oversold reading.

Orange Juice tanks further, extends its losing streak to 10 weeks

U.S. Hot Rolled Coil Steel has climbed for 5 weeks.

Sugar broke its 5 week winning streak, erasing the past 3 weeks of gains.

Platinum has fallen for 4 straight weeks.

Silver in USD broke its 5 straight weeks of advance.

Gold in USD snapped its 8 week winning streak. 

Australian Coking Coal prices rose slightly, snapping its 7 straight weeks of losses.

Cattle is in a 5 week losing streak, while Uranium snapped its 4 weeks of decline.

Brent Crude and WTI Crude have fallen for 6 straight weeks. 

Lean Hogs broke their 4 consecutive weeks of advance,

Wheat slumped and broke its 6 week winning streak.

Tin prices have soared 12% over the past  weeks.

while Lithium Hydroxide has now lingered in weekly oversold territory for 91 consecutive weeks.

Currencies also saw much action.

The Yen and Swiss rose, confirming the ‘risk-off’ type of week.

The Aussie fell and did the Loonie.

In turn, we see the Yen in overbought territory this week against these ‘risk’ currencies.

The British Pound rose

And the U.S. Dollar rose against everyone.

The larger advancers over the past week comprised of;

Baltic Dry Index 25.3%, Lumber 2%, JKM LNG in Yen 2.9%, Urea, U.S. Gulf price 1.7%, Oats 1.5%, ATX 2.5% and IBEX rose 3.1%.

The group of largest decliners from the week included;

Aluminium (3.4%), Bloomberg Commodity Index (3.8%), Cotton (3.1%), Lean Hogs (4.6%), Heating Oil (2.7%), JKM LNG (2.3%), Arabica Coffee 4.2%, Lithium Hydroxide (1.9%), Tin (7.3%), Newcastle Coal (4.1%), Natural Gas (8.5%), Orange Juice (2.7%), Palladium (9.2%), Platinum (5%), Robusta Coffee (6.6%), Sugar (9.7%), Sugar #16 (4.5%), S&P GSCI (2.8%), CRB Index (3%), Dutch TTF Gas (6.5%), Brent Crude (1.6%), Gasoil (3.7%), Urea Middle East (4.2%), Silver in AUD (1.8%), Silver in USD (4%), Gold in USD (2.7%), Gold in GBP (2.2%), Gold in EUR (1.9%), Gold in CHF (2.1%), Corn (7.5%), Rice (1.6%), Soybeans (3%), Wheat (8%), Shanghai Composite (1.7%), AEX (1.7%), China A50 (1.6%), SOX (7.2%), HSECI (2.9%), Hang Seng (2.3%), BOVESPA (3.4%), Jakarta Composite (7.8%), Russell 2000 (1.5%0, TAIEX (2.9%), Nasdaq Composite (3.5%), KOSPI (4.6%), Mexico (2.6%), Nasdaq Biotech (1.6%), Nasdaq 100 (3.4%), Nikkei 225 (4.2%), NIFTY (2.9%), SA40 (3.5%), SENSEX (2.8%), SET (3.4%), TA35 (1.8%), FTSE 100 (1.7%), ASX 200 (1.5%), ASX Materials (5.3%) and the ASX SmallCaps fell 2.5%.

March 2, 2025

By Rob Zdravevski

rob@karriasset.com.au