Push And Pull

The yanking this way and that by fundamental forces now growing wilder and woollier by the day, left gold almost becalmed in a sea of madness.

Oil is tumbling into a seemingly bottomless bit, breaching $61 for WTI crude and looking every bit as if it will go lower. (Although we’re sure that the “magical” level of $60 will bring out bargain hunters and risk takers.)

OPEC cut its estimates for demand by 300,000 barrels per day. That sent markets into a tizzy. The fall in oil is dragging U.S. equities markets down. All three American indices are off by almost 1.50%. 

The sleeping bear in stocks awoke and thrashed about. Some believe that oil is a leading indicator for further economic slowdowns. Nevertheless, the Shanghai index is up almost 3%, recovering about half of its own sharp drop yesterday.

Tellingly, the VIX (Volatility Index) shot up about 22% today, reflecting not only the actual behavior in the market but the uneasiness all this flooding data is producing. The end-of-year holiday trading famine doesn’t help volatility either. Lots of big money people take lots of time off at this time of year.

Yet, all the major developed world bonds saw yield decline rather than rise. The 10-year U.S. Treasury is slowly slipping toward 2%.

To close, eyes on the dollar, which today propped up gold. The yellow precious metal would have been down around $9.00 if the dollar hadn’t been so weak.