A brief dive into Lumber, Bonds, Dairy, and British Pound
Excerpts from the video:
Welcome to 4 markets 4 minutes where we give about a minute to markets that have some kind of noteworthy move today. Today's markets are going to be the British pound, Dairy - that being the class 3 milk, and the interest rates, and lumber.
The Jan class 3 milk prices are making a new contract low down to 1380. Just three months ago it was trading around 1617. Couple reasons -- one is General production is higher and then also the trade tariffs have definitely had an impact on prices as well. If we look at a different time frame and move from a daily chart to a weekly chart you can see how bad things have gotten and how quickly have gotten bad. If you look at the continuation chart for class 3 milk, which is just a rolling most actively traded contract, you could see that lumber made lows back in early 2018 close to about 1340. Perhaps that level might turn out to be some kind of support.
The British pound which I will bring up here is suffering from Theresa May's latest woes in terms of getting a Brexit deal done. Today's lack of confidence in the way Brexit is being done and nothing's moving forward at the moment so the British pound is getting smacked. If you are non-British perhaps now would be a good time surprise visit London as it is getting all the more cheaper to visit.
The next market to look at is the interest rates. The long bonds right did make a new swing high today. The old one was made two days ago up at 14326, today's high is 14331, with real good strength of trend with the adx sitting at about 42. If we look at the inverse of that, the yield has gone down as it's supposed to as bonds go higher. The back in the beginning of November was upwards 3.45% and as of today implied yield has dipped down to about 3.10% - that's 35 basis points off the interest on the note!
Lumber today is down $15 - that is a limit move. Ample amounts of lumber combined with ample amounts of the ability to transport it out of Canada - so market’s doing a good job of a correction here. As a backdrop, in terms of housing affordability - that's getting a little bit of a decrease right now. Even though rates have improved like I just showed you they are still relatively higher than they used to be, so in terms of affordability of the home you know that's come off a little bit and that doesn't necessarily bode well as one input in terms of demand.
So that’s it for our 4 markets in about 4 minutes … the British pound, the class 3 milk, lumber futures and the interest rates today.
If you guys have any questions about how to strategize and think of a way to take advantage of some of these moves that we see, feel free to contact m. Until then we will leave it there - thanks for watching