What is happening here? – Some interesting processes from the last period on the capital market

The power of dollar has been broken, which means that the FED’s ambitious plan about increasing the interest was turned down. At least this is what the market says.

Some less rosy American macroeconomic data came out (weaker employment increase, hesitating industry), which makes the FED to be loose on monetary conditions. This move can give a temporary breath to the emerging markets, which are indebted and are facing serious economic problems.

The stock markets of emerging countries came back from their low points, as well as commodities and energy sources.

However the USA and Europe, especially the latter are weak. It seems to stop the ‘’we are happy about poor economic data, because it means more money printing’’ reaction. Loose monetary policy has less and less impact.

Europe could bounce as well, because exports are significantly going towards developed markets; but the stronger euro is retraining the customers.

The yields on government bonds are falling because of the loose conditions of central banks and the slowdown of global economy. The Japan 10Y is 0.05%, the German is 0.28% and the American is 1.84%. The latter has more latitude to fall, especially if the risk-averse mode remains.

However on the Gold market there is big happiness. Diminishing returns and the slowdown of global economy, also the fear of recession on developed markets are helping. On year-to-date basis Gold shares are 11 percent; the Market Vectors Gold Miners fund has a 25 percent plus this year.