Macro Extremes (week ending May 9, 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)

U.S. 3 month bill yield

MYR/USD *

THB/USD *

Mexico’s IPC equity index *

Overbought (RSI > 70) 

Turkish 10 year government bond yield

U.S. 10 year minus U.S. 5 year bond yield spread *

Cattle

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

Czechia’s PX Index

Chile’s IGPA and IPSA equity indices *

And Poland’s WIG equity index

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

Urea (U.S. Gulf price) *

PHP/USD * 

Tel Aviv 25 equity index

Extremes below the Mean (at least 2.5 standard deviations)

WTI Crude Oil *

USD/INR

USD/KRW

Pakistan’s KSE equity index

Oversold (RSI < 30)

Indian 10 year government bond yield * 

Richards Bay Coal *

Lumber

Lithium Carbonate *

Lithium Hydroxide *

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

None

Notes & Ideas:

Government bond yields rose again.

Brazilian and Indonesian 10 year yields have declined for 4 straight weeks.

Indian and Norwegian 10 year bond yields broke their 7 week of declines.

U.S. 30 year minus U.S. 10 year bond yield dropped out from being overbought.

Equities were mostly higher.

Many streaks are in progress.

The AEX, ATX, DAX, MIB, HSCEI, Hang Seng, IBEX, KLSE, KRE Regional Banks, KOSPI, OMX Helsinki, PSE, IGPA, TSX and ASX Materials have climbed for 4 straight weeks.

The Bovespa, S&P SmallCap 600, Russell 2000, FTSE 250, S&P MidCap 400, SET, WIG, ASX Industrials, ASX SmallCaps and KBW Banks Index are in 5 week winning streaks.

The All World Developed (ex USA) Index, DJ Transports, IDX, SA40 and OMX Oslo broke their 4 weeks of consecutive advance.

While biotechs were smacked.

Commodities were mixed, with a higher bias.

The largest winners were Oils & Distillates, Gases (again), Coals, Precious Metals, Urea, Sugar and Base Metals.

The notable losers included Shipping Rates, Orange Juice, Lithium Hydroxide, Corn & Wheat.

Newcastle Coal prices have shipped out from being oversold over the past 20 weeks.

Cattle, Rubber and Uranium are in 4 week rising streaks.

Inversely, Corn, Rice and Wheat are in 4 week losing streaks.

U.S. Gulf Urea prices have risen for 6 straight weeks and has climbed to prices not seen since November 2022

And Lithium Hydroxide has been oversold territory for 101 consecutive weeks.

Currencies were active.

The Aussie was mixed, the Loonie weaker and the British Pound was stronger.

The U.S. Dollar (DXY) Index has risen for 3 weeks and notably advanced since its oversold reading of 4 and 5 weeks ago.

AUD/CAD and AUD/EUR are in a 5 week winning streak, while AUD/JPY and AUD/USD broke their winning streaks at the 4 week mark.

Perversely, the AUD/ZAR has fallen for 4 straight weeks.

The USD has declined for 5 consecutive weeks against the Rand.

The Brazilian Real has climbed for 4 weeks versus the USD as has the GBP against the Yen.

CHF/AUD and the EUR/GBP are in 4 week losing streaks.

The USD has sunk for 8 of the past 10 weeks versus the Loonie.

And the Philippine Peso has risen for 5 weeks against the USD.

The larger advancers over the past week comprised of;

Rotterdam Coal 1.5%, Cocoa 3.6%, Brent Crude 4%, WTI Crude 4.7%, Heating Oil 3.7%, HRC 1.8%, JKM LNG 1.8%, Cattle 1.7%, JKM LNG in Yen 11.2%, Tin 4.3%, Newcastle Coal 1.6%, Natural Gas 4.6%, Nickel 2.1%, Palladium 3.2%, Platinum 3.7%, Gasoline 4.4%, Sugar 3.6%, S&P GSCI 2.2%, CRB 1.7%, Dutch TTF Gas 4.7%, Gasoil 2.7%, Silver in AUD 2.8%, Silver in USD 2.2%, Gold in AUD 3.2%, Gold in CAD 3.5%, Gold in CHF 3.2%, Gold in EUR 3.1%, Gold in GBP 2.4%, Gold in USD 2.7%, Oats 1.7%, Shanghai Composite 1.9%, CSI 300 2%, ATX 4.6%, BUX 2%, DAX 1.8%, MIB 2.7%, Hang Seng 1.6%, Nikkei 225 1.8%, PX 4.2%, SOX 1.6%, IGPA 2.4%, TA35 4.7%, Nasdaq Transports 1.6%, Vietnam 3.3%, WIG 2%, BIST 2.4%, ASX Industrials 1.5% and the ASX SmallCaps rose 3.5%.

The group of largest decliners from the week included;

Baltic Dry Index (7.4%), Cotton (2.5%), Palm Oil (1.7%), Lithium Hydroxide (4.6%), Orange Juice (10.2%), Corn (4.1%), Rice (1.6%), Wheat (3.9%), KSE (6.1%), Nasdaq Biotech ETF (8.5%), NIFTY (1.4%), Copenhagen (1.4%), SMI (1.4%), IBB ETF (7.9%) and the XBI Biotech ETF sunk 8.5%.

May 11, 2025

By Rob Zdravevski

rob@karriasset.com.au