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Three charts to gauge where and when markets will break Add to ...

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“Never short a dull market” is an old trader saying that aptly describes where we are right now, and let me add they’re not the easiest markets to write about either.

There are always individual opportunities to discuss, but asset markets as a whole are stuck in a grey zone. The reflation trade – outperformance of economically cyclical stocks at the expense of conservative, credit-sensitive sectors such as utilities and consumer staples – that began in July, 2016, and intensified after the U.S. election – has been widely unwound. But the downward momentum for cyclical sectors has also slowed and it feels like most stocks are now just treading water in search of direction.

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Crude price vs. inventories

175%

-30%

WTI crude

U.S. $/bbl (YoY % change),

left scale

-20

125

-10

75

0

25

10

-25

20

-75

30

DOE total U.S. crude inventories

YoY % change, INVERTED, right scale

-125

40

2007

’08

’09

’10

’11

’12

’13

’14

’15

’16

THE GLOBE AND MAIL, SOURCE: BLOOMBERG; SCOTT BARLOW

Crude price vs. inventories

175%

-30%

WTI crude

U.S. $/bbl (YoY % change),

left scale

-20

125

-10

75

0

25

10

-25

20

-75

30

DOE total U.S. crude inventories

YoY % change, INVERTED, right scale

-125

40

2007

’08

’09

’10

’11

’12

’13

’14

’15

’16

THE GLOBE AND MAIL, SOURCE: BLOOMBERG; SCOTT BARLOW

Crude price vs. inventories

-30%

WTI crude U.S. $/bbl (YoY % change), left scale

175%

DOE total U.S. crude inventories YoY % change, INVERTED, right scale

-20

125

-10

75

0

25

10

-25

20

-75

30

-125

40

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

THE GLOBE AND MAIL, SOURCE: BLOOMBERG; SCOTT BARLOW

S&P/TSX vs. emerging markets

17,000

130

120

15,000

110

100

13,000

90

11,000

80

70

9,000

60

50

7,000

S&P/TSX composite, left scale

40

MSCI EM index in $Cdn., right scale

5,000

30

2007

’08

’09

’10

’11

’12

’13

’14

’15

’16

THE GLOBE AND MAIL, SOURCE: BLOOMBERG; SCOTT BARLOW

S&P/TSX vs. emerging markets

17,000

130

120

15,000

110

100

13,000

90

11,000

80

70

9,000

60

50

7,000

S&P/TSX composite, left scale

40

MSCI EM index in $Cdn., right scale

5,000

30

2007

’08

’09

’10

’11

’12

’13

’14

’15

’16

THE GLOBE AND MAIL, SOURCE: BLOOMBERG; SCOTT BARLOW

S&P/TSX vs. emerging markets

17,000

130

120

15,000

110

100

13,000

90

11,000

80

70

9,000

60

S&P/TSX composite, left scale

50

7,000

MSCI EM index in $Cdn., right scale

40

5,000

30

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

THE GLOBE AND MAIL, SOURCE: BLOOMBERG; SCOTT BARLOW

U.S. 10-year Treasury yield vs.

net futures position

300,000

3%

10 year U.S. Treasury bond yield,

left scale

200,000

2.5

100,000

2

0

-100,000

1.5

-200,000

1

-300,000

CFTC non-commercial

net futures position:

10 year U.S. Treasury bond,

right scale

0.5

-400,000

-500,000

0

2015

2016

2017

THE GLOBE AND MAIL, SOURCE: BLOOMBERG; SCOTT BARLOW

U.S. 10-year Treasury yield vs.

net futures position

300,000

3%

10 year U.S. Treasury bond yield,

left scale

200,000

2.5

100,000

2

0

-100,000

1.5

-200,000

1

CFTC non-commercial

net futures position:

10 year U.S. Treasury bond,

right scale

-300,000

0.5

-400,000

-500,000

0

2015

2016

2017

THE GLOBE AND MAIL, SOURCE: BLOOMBERG; SCOTT BARLOW

U.S. 10-year Treasury yield vs. net futures position

300,000

3%

200,000

2.5

100,000

2

0

-100,000

1.5

-200,000

1

10 year U.S. Treasury bond yield,

left scale

-300,000

0.5

-400,000

CFTC non-commercial net futures position:

10 year U.S. Treasury bond, right scale

-500,000

0

2015

2016

2017

THE GLOBE AND MAIL, SOURCE: BLOOMBERG; SCOTT BARLOW

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