Macro Extremes (week ending May 23, 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)

British 30 year government bond yield

U.S. 30 year government bond yield

Norwegian 10 year government bond yield

TBT & TBX

Platinum 

MYR/USD

THB/USD

Overbought (RSI > 70) 

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

U.S. 30 year minus U.S. 5 year bond yield spread 

Gold in AUD and USD

GBP/USD

PHP/USD

And Spain’s IBEX index *

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

None

Extremes below the Mean (at least 2.5 standard deviations)

None

Oversold (RSI < 30)

Indian 10 year government bond yield * 

Lithium Carbonate *

Lithium Hydroxide *

USD/SEK

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

None

Notes & Ideas:

Most Government bond yields rose, again as did investment grade and high yield corporate bonds.

Australian and Euro bond yields along with British 2, 3 & 5 year yields fell.

IEF and TLT are in 4 week losing streaks.

Indian 10 year bond yields rose and broke their 7 weeks of decline.

Italian 2 year bond yields broke their 4 week rising streak.

U.S. 10 year yield minus U.S. 10 year inflation rate is nearly overbought

And U.S. 5, 7, 10, 20 and 30 year yields are in 4 week rising streaks along with the U.S. 5 year minus U.S. 3 month spread and the respective U.S. 5 year yield and U.S 10 year yield minus inflation rate.

Equities were mostly weaker.

Predictably, many of the winning streaks appearing in last weeks edition have come to an end.

The remaining winning streaks intact belong to the Jakarta Composite, HSCEI, Hang Seng and the IBEX, sitting at 6 weeks.

Spain’s IBEX remains the only index in overbought territory.

And the All World Developed (ex USA) index has risen for 6 of the last 7 weeks.

Commodities were mixed.

The largest winners were LNG, Copper, Orange Juice, Precious Metals & Grains.

The notable losers included Cocoa, Hogs, Urea, Robusta Coffee and Shipping Rates.

Platinum is overbought and Gold in AUD and USD returned to being so.

Newcastle and Richards Bay Coal rose and are no longer oversold.

Cattle and Urea left overbought territory.

Uranium broke its 5 week winning streak.

Corn rose and broke its 5 week losing streak. 

Currencies were little more active.

The big news was the 2% decline in the U.S. (DXY) Dollar and it broke its 4 consecutive weeks of advance.

The Greenback feel more than 2% against the Won, Yen, Swiss and Swedish Krona.

USD/ZAR is in a 7 week falling streak.

The Aussie broke all streaks which appeared in last weeks edition. The AUD fell everywhere except vs the USD, where it rose 1.4%

The Swiss and Yen were firmer, mimicking the risk-off sentiment seen in equities.

The British Pound was stronger and has risen for 6 straight weeks against the EUR.

And the Loonie was mixed.

The larger advancers over the past week comprised of;

Rotterdam Coal 1.4%, All World Developed (ex USA) 1.7%, Cotton 1.9%, Copper 5.3%, JKM LNG 5%, Cattle 1.8%, LNG in Yen 4.1%, Newcastle Coal 4.3%, Orange Juice 8.8%, Palladium 4.6%, Platinum 9.9%, Dutch TTF Gas 3.7%, Silver in AUD 2.2%, Silver in USD 3.7%, Gold in AUD 3.3%, Gold in CAD 3.2%, Gold in CHF 2.8%, Gold in EUR 3%, Gold in Sterling 2.8%, Gold in USD 4.9%, Gold in ZAR 3.9%, Corn 3.6%, Oats 3.6%, Rice 2.8%, Wheat 3.3%, IDX 1.5% and the Hang Seng China Enterprises Index (HSCEI) rose 1.4%.

The group of largest decliners from the week included;

Baltic Dry Index (3.5%), Cocoa (10.4%), DXY (1.9%), Lean Hogs (2%), Tin (1.7%), Aluminium (1.7%), Gasoline (1.3%), Robusta Coffee (1.5%), Sugar (1.3%), Urea (3.2%), Gasoil (1.1%), AEX (1.5%), KBW Bank (4.1%), BUX (1.7%), CAC (1.9%), DJ Industrials (2.4%), DJ Transports (4.1%), MIB (2.9%), S&P SmallCap 600 (4.2%), Russell 2000 (3.5%), Nasdaq Composite (2.5%), KLSE (2.3%), KRE Regional Banks (4.8%), S&P MidCap 400 (3.6%), Nasdaq 100 (2.4%), Nikkei 225 (1.6%) and the OMX Stockholm fell 2.5%.

May 25, 2025

By Rob Zdravevski

rob@karriasset.com.au