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U.S. Dollar Vs Treasury Yield, Gold, Crude Oil and Stocks

Stock-Markets / Financial Markets Dec 18, 2008 - 01:01 PM GMT

By: Richard_Shaw

Stock-Markets

Best Financial Markets Analysis ArticleHere are 3-year charts comparing weekly performance of the US Dollar index to:

  • (A) to the yield on 3-month and 2-year US Treasuries,
  • (B) to the price of crude oil and gold bullion,
  • (C) to the price for the MSCI World ex US stocks index and the Russell 3000 US stocks index.

Relevant proxy securities are UUP or UDN (for Dollar up and Dollar down), SHV (for short-term Treasuries), SHY (for 1-3 year Treasuries), USO (for crude oil), GLD (for gold bullion), VEU (for world ex US stocks) and IWV or VTI (for US stocks).

(A) USD to Treasuries

(B) USD to Oil & Gold

(C) USD to US & World ex US Stocks

Crazy Sept-Oct

Here is a 6-month daily chart of the US Dollar index versus the yield on the 3-month and 2-year Treasuries.

In addition to plunging interest rates, the tremendous confusion in the credit markets is reflected in the yield at the short end with the 3-month Treasuries in September and October.

Dollar Bearish

This is a 1-year daily chart of UDN (the inverse of the US Dollar index — Dollar down).

The red horizontal lines show that the Dollar is about half way between its recent highs and lows, but with an apparent tendency to go down (UDN going up).

Once the UDN price goes past the half way point, the trend may become more convincing.  The flooding of Dollars in the many rescue programs makes further declines in the Dollar (and a rise in UDN) more likely than not.


By Richard Shaw 
http://www.qvmgroup.com

Richard Shaw leads the QVM team as President of QVM Group. Richard has extensive investment industry experience including serving on the board of directors of two large investment management companies, including Aberdeen Asset Management (listed London Stock Exchange) and as a charter investor and director of Lending Tree ( download short professional profile ). He provides portfolio design and management services to individual and corporate clients. He also edits the QVM investment blog. His writings are generally republished by SeekingAlpha and Reuters and are linked to sites such as Kiplinger and Yahoo Finance and other sites. He is a 1970 graduate of Dartmouth College.

Copyright 2006-2008 by QVM Group LLC All rights reserved.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Do your own due diligence.

Richard Shaw Archive

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