Market Trends Continue To Swirl Inconsistently Around Rising Rates

(This is an excerpt from an article I originally published on Seeking Alpha on August 19, 2013. Click here to read the entire piece.)

The mixed signals from financial markets continue as interest rates continue to climb. In fact, the steady rise in rates is the main feature within a swirl of inconsistent patterns. The head scratching reached some kind of climax when the U.S. dollar index (UUP) experienced a surprisingly sharp decline on Thursday (August 15th) even as interest rates shot up again. {snip}


TLT continues its decline from May even as other supposedly related indicators switch directions
TLT continues its decline from May even as other supposedly related indicators switch directions

Source: FreeStockCharts.com

{snip}

Other commodity-related names like Freeport-McMoRan Copper & Gold Inc. (FCX) and BHP Billiton Limited (BHP) have continued to rally off June lows in spite of rising rates. {snip}


BHP stalls at its QE3 price
BHP stalls at its QE3 price

FCX stalls at its QE2 price
FCX stalls at its QE2 price

The Australian dollar's relief rally stalls: the end or the pause that refreshes?
The Australian dollar’s relief rally stalls: the end or the pause that refreshes?

Source: FreeStockCharts.com

In the meantime, 30-year mortgage rates have finally managed to stabilize over the last month or so after a sharp 2-month spike that at one point was racing ahead of Treasury yields.


The race to higher yields...
The race to higher yields…

Source: St. Louis Federal Reserve

This could be the calm before the next storm. Thursday’s jump in rates sent the iShares Dow Jones US Home Construction Index Fund (ITB) further into negative territory for the first time this year before a strong intraday recovery. {snip}


The weight of rates finally cracked the homebuilder index
The weight of rates finally cracked the homebuilder index

Source: FreeStockCharts.com

{snip}

I am also VERY interested to see how Federal Reserve Chairman Ben Bernanke addresses the topic of tapering in this year’s Jackson Hole confab coming up this weekend. {snip}

Be careful out there!

(This is an excerpt from an article I originally published on Seeking Alpha on August 19, 2013. Click here to read the entire piece.)

Full disclosure: long SSO calls, TPH, TBT, GLD, net long the U.S. dollar, net long Australian dollar

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