Throughout last year, the following data series set the tone, moving pretty much in lockstep:
- Oil prices went down (adjusted for seasonality).
- Other industrial commodities went down.
- The trade-weighted US dollar rose.
- The Chinese stock market went down.
- The US stock market went down.
- The US industrial economy went down.
Now there are some signs that the correlations are breaking apart.
While gas prices are still going down:
Industrial commodities have gone basically sideways for 3 months:
The trade-weighted US dollar recently declined, even as gas prices declined (the graph is one week delayed and inverted):
The spot price of the US dollar against major currencies has not just continued to decline, it is now only up about 1.5% YoY:
And while Chinese stock prices made a big move down and have stayed there...:
... the US stock market is no longer following:
Only about one month of divergence, so there hasn't been a decisive break - yet. But my personal view is that the "flight to safety" in US Treasuries...:
... which, just like 2012-13, has caused a downward spike in mortgage rates:
And given rise to a 5-year high in purchase mortgage applications:
This means that there has been a break in trend, and a new dynamic is emerging.