With the bearish closes in the 10-Year U.S. Treasury market this week we are now facing the next leg of dollar illiquidity spilling over into larger markets. Emerging markets such as Turkey, Malaysia and Brazil are taking it on the chin. But, now Mexico is staring at an ugly currency meltdown as the Peso flirts with a 20 handle.
None of this bodes well now that the Italian coalition has formed around a fundamentally belligerent stance towards both the EU and the EMU while the ECB remains trapped at the negative-bound on rates.
Italian 5 year debt closed above 1% this week, Gold below $1300 and the euro is in crash mode closing at $1.1771.
Find out why all of this is happening and where the price of oil is heading and why Russia may be the sleeper market for the rest of this decade.
Multiple weekly closing breakouts/downs this week raise the probability of catastrophic rise in interest rates in emerging markets feeding a rising dollar.
Italy is now a Major Risk Thanks to the New Coalition Agreement:
Emerging Markets are Getting Crushed and the Dollar just Started Rising:
https://www.zerohedge.com/news/2018-05-15/trader-warns-emerging-markets-arent-heavy-theyre-setting-implode
Gold Below $1300. Ugly Technical Breakdown:
U.S. Dollar is Rallying: Right on Schedule
https://www.investing.com/quotes/us-dollar-index
Emerging Markets Hit with Biggest Outflows since 2016
https://www.zerohedge.com/news/2018-05-11/emerging-markets-hit-biggest-outflows-december-2016
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One of the important differences between Italy and Greece is that Greece has always been in need of European subsidies (that they received and are still receiving ) and Italy is “paying” Europe and never received any subsidy .