by Chris Kimble
A good deal of the time, Doc Copper and Yields tend to move in the same direction. Of late, something strange is taking place!
Both headed sharply lower and bottomed together in March of this year. Since then, Doc Copper has experienced a very sharp rally (up over 40% off the lows) and yet yields are near all-time lows.
This price action has created one of the largest spreads in years over the past 5-months.
Who is telling the truth?
Is ole Doc Copper suggesting that the economies around the world are improving and the likelihood of inflation is increasing?
Are flat to falling yields suggesting that the economy will not improve and inflation should be of no concern to the Fed?
The takeaway from this chart; One asset is likely to be very misleading/not telling the truth currently and a giant game of “catch-up” will take place. This mispricing in time will lead to a wonderful trading opportunity in my humble opinion.