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A Bird's Eye View Blog

Fireside Charts: China’s Manufacturing Growth, Checking in on Commodities, and What the Treasury Spread is Telling Us

By:BCM Investment Team | Date:Apr01, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

Is China's recent economic slump coming to an end? The March Manufacturing PMI reports show the trend may be reversing due to strong Chinese factory activity data. Here at home, a chart on which indices had the highest 1-year returns may surprise you. Meanwhile, commodities across the board are all down on a 1-year basis. The U.S. 10-Year Treasury Yield still hovers above 2.5%. The treasury spread is settling in at about 1% higher than before the 4Q18 volatility began. Lastly, the Chicago PMI may have taken a spill recently, but it’s still growing. Where will it go from here?

  

1. China's PMI snapped back into growth mode (barely). Has the trend reversed?

 

Source: WSJ Daily Shot, as of 3/31/19

 

 

2. Which index has the highest 1 year return? NASDAQ? DOW Jones Industrials?  Transports? Small Caps? No...it was Utilities...

 4.1 chart 1

Source: Thechartstore.com, as of 4/1/19

 

 

3. Despite the FED turning markedly more Dovish, are they being "out-Doved" by the world's other Central Banks? The USD is grinding higher, not lower...

 

 

Source: WSJ Daily Shot, as of 3/29/19

 

 

4. Some longer term perspective on the USD...

 

4.1 chart 6

Source: Thechartstore.com, as of 4/1/19

  

 

5. Some perspective on where the U.S. 10-Year Treasury has been...

 

Source: Thechartstore.com, as of 4/1/19

  

 

6. Was the end of the 35 year bond cycle a false breakout?

 

4.1 chart 2

Source: Thechartstore.com, as of 4/1/19

 

 

7. The high yield spread to treasuries is settling in at about 1% higher than before the 4Q18 volatility began.

 

 

Source: WSJ Daily Shot, as of 4/1/19

 

  

8. Another symptom of too much Treasury supply?

 

 4.1 chart 19

Source: Deutsche Bank, as of 3/29/19

 

  

9. All of these are down on a 1-year basis...

 

Source: Thechartstore.com, as of 4/1/19

   

 

10. Similarly, was Gold's breakout from it's wedge a false negative?

 

 4.1 chart 3

Source: Thechartstore.com, as of 4/1/19

   

 

11. But still growing...

 

4.1 chart 10

Source: WSJ Daily Shot, as of 3/29/19

  

 

 

The Dow Jones Industrial Average rose 200 points this morning, starting the quarter off strong with U.S. and China manufacturing data. However, we know better than to try to predict the next dip or try to time the market. Read why buying the dips, especially if in the late stage of the current economic cycle, means significantly fewer positive outcomes.

Should You Buy the Dip? 

 

 

 

Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.