As equities sell-off sharply, cyclical and trade-sensitive businesses, in particular, have fallen on hard times as investors rotate into defensives.  While still down today, sectors like Utilities, Consumer Staples, and Real Estate have held up slightly better. In commodities, this same dynamic has played out. Copper, which is a bellwether for global manufacturing activity, has fallen sharply in response to trade tensions and concerns over global growth. Meanwhile, gold’s safety status has led it to rally.  In Monday’s session, gold has been one of the few assets to rally, rising 1.84% from Friday’s close.  Looking at the ratio between the two commodities over the past few years shows just how much gold has been outperforming.  While it has been rising slowly over the past year, the ratio has really ripped higher in the past week.  In fact, over the past week, the relative strength of gold versus copper has seen its largest short-term move since February 2016.

Similarly, the Japanese Yen which is commonly viewed as a safe haven currency has been surging versus the dollar.  Over the past several years, USDJPY has been in consolidation.  After bottoming this time of year in 2016, the cross made a series of higher lows and lower highs.  Earlier this year, USDJPY failed to take out the downtrend line, continuing to move below the uptrend line.  Now, over the past few sessions, the Yen has further appreciated as global trade tensions mount. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

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