June twenty-second, two thousand twenty-five (250616-250622)
The current trading backdrop is highly similar to the year 06-07, That year, the best trades of the year mostly came from commodities and non-U.S. assets (especially commodity-exporting countries), and all benefited from the theme of a weakening dollar.
Chart: The dollar index is still locked in a tense battle below the downtrend line
Keep a close eye on the chart above
This week we went from soybeans to Brazil; essentially, that also reflects a bet on this logic. See details in Notes250616 A rare macro trading opportunity: starting with soybeans Many EM currencies/dollar pairs and EM stock markets could perform well in this cycle, as long as 1) domestic conditions are stable, 2) there is a growth or catalyst thesis, and 3) they are commodity-related
Another chart we are watching is BCI, namely the Bloomberg Commodity Index:
Chart: A potential breakout
The commodity index has been range-bound at low levels since 22, and now a potential breakout may be forming..
Friday’s Notes also discussed oil prices.Oil prices are at a level we do not understand, The only thing we can be sure of is that this situation remains highly unusual; it is not a conventional, favorable contrarian opportunity to “fade an event shock.”
At a time like this, any attempt to short oil prices carries far greater risk than in historically similar events.
Choosing exposure to a commodity index can smooth uncertainty-driven volatility while still allowing some participation in a tail-risk bet.
Cross-asset weekly review (250622)
1) TLT, SPX, and USDX
Chart: TLT, the dollar index, and SPX
TLT rose as expected;
Against The bearish view on U.S. equity indexes is unchanged, though short-term momentum is strong; we will look for an opportunity to open shorts later;
The dollar index below 100, In foreign exchange, the key pairs to watch are EUR and CHF;
2) Gold, silver, and platinum
Chart: The first stage of the dollar weighing on gold
“In the first phase of a geopolitical trade, the dollar’s reaction often suppresses gold’s price response. That is what we have seen from the launch of the missiles through today. In the second phase, if the situation continues to worsen or persists, trading in gold and the dollar shifts from one suppressing the other to both rising together.” —Notes250618 The Two Phases of Geopolitical Trading
Gold has now fallen to the middle of a very wide, high-volume area, where buyers and sellers seem willing to trade at any price within the range.A key issue with a high-volume area is that it can become a dense cluster of losing positions (various signals repeatedly lead investors to enter and exit at the wrong prices). Once the price leaves that area, those on the wrong side may be forced to stop out or chase, creating momentum in the direction of the trend and a genuine breakout.
The imbalance-driven move implied by this market-microstructure logic is what the current gold market urgently needs.
And that move could come from the foreign-exchange market... although it is not yet apparent.
Chart: Gold overlaid with platinum; speculative money is still lingering in the white-metals market
Since we exited,
Platinum and platinum-related positions are still hovering around the target price.
Chart: Platinum and related positions (discussed earlier) reached their target price and were closed
3）Bitco
Chart: Since we exited, it has already fallen from the target price
Our earlier assessment was that the consistency criterion was not met, so we closed all positions at 105200 (the target price).
Since we exited at our target price, Bitco has repeatedly failed to break out and has traded sideways through this week,
It has now fallen below our exit point
Review this trade for yourselves.
4）EURUSD、USDJPY、USDCHF
The dollar index below 100, In foreign exchange, the key pairs to watch are EUR and CHF.
For details, see:Notes250618 Discussing the FX positions we hold + Notes250620 Discussing the FX positions we hold (continued)
Chart: EURUSD
Chart: USDCHF
EUR is already in hand, and CHF is not far from the entry point (if you are eager to trade, see the earlier Wrap),
There is one change worth mentioning, JPY has now been completely removed from our target watchlist; we will explain why in detail next week.
5）Soybeans & Brazil equity index
Chart: Soybean price to watch
Chart: Brazil equity index; we will bet on a record high
For this section, see the opening of this article + Notes250616 A rare macro trading opportunity: starting with soybeans
6) Bloomberg Commodity Index BCI
Chart: Key levels 22
The weekend is over. Wishing everyone who made it this far a good life and all the best in the new week!
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Note: All content herein is for reference only, does not constitute investment advice, and is not a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on this information as a basis for making decisions.