Multi-Asset Essentials

We give 7 reasons for a multi-week bounce in bonds.

Reasons to trade with a bullish bond bias include: Bund yields hitting first Fibonacci level; TLT skew spiking to a level that has preceded tactical rallies; technical signs of breakevens rolling over; a growing list of commodities failing to reach new highs.   

FX plays on softer commodities.

USD/CLP is testing key resistance and, while it has diverged from copper over past 2 years, CLP is unlikely to be able to withstand a mix of sharply slowing growth and weaker metal prices. AUD/JPY vulnerable to lower commodity prices and UST rally.   

Striking equity charts

US equities look primed to bounce vs. commodity-exporter markets (chart below). US Quality relative rallies off trendline (p8). Global Retailing and Autos relatives revive from key levels while Semis chart takes bearish medium-term turn (p11). 

Multi-Asset Essentials