Must-See Macroeconomic Charts: When Gold and Oil Meet Trump (2024/11/7)
This issue of "Macro Must-See Charts" analyzes the relationship between U.S. Treasury yields and oil prices, pointing out that if U.S. Treasury yields decline, it will be an unexpected event in the coming months. Meanwhile, it reviews the 60% increase in gold during Trump's presidency, with analysts suggesting that the market's perception of Trump's influence on gold should not be trusted. The silver-to-gold ratio shows bullish signals, which may bring opportunities to the precious metals market. Additionally, it analyzes the Federal Reserve's easing policies and Trump's potential impact on oil prices
U.S. Treasury Signals for Oil Prices
Analyst: As shown in the chart below, the peak of crude oil in April this year also marked the peak of the 10-year U.S. Treasury yield. If this time the Treasury yield follows the correlation with oil prices and declines, it will be the biggest surprise in the next 3-4 months.
Trump vs Gold
Analyst: Do not believe the market narrative that "Trump's presidency is bad for gold." Looking back at the last Trump administration, gold increased by about 60%.
Silver/Gold Ratio Observation
Analyst: The silver to gold ratio is the inverse of the gold-silver ratio, and its chart signals are often clearer. The chart below shows that the "silver-gold ratio" is preparing for a historic rise; a descending expanding wedge is usually a very bullish pattern, which may bring a once-in-a-lifetime opportunity to the precious metals market. Of course, it should be noted that this is a quarterly chart with a long-term perspective.
Financial Conditions
If the Federal Reserve truly intends to ease, then they clearly must take action tonight to adjust expectations, as the current market environment is much tighter than before a 50 basis point rate cut.
Trump vs Oil Prices
HFI Research: What is the impact of Trump's presidency on the crude oil market, positive or negative? Pay attention to the situation of sanctions enforcement in early 2025; changes in Iran's floating oil reserves will be a major signal.
Observe the position marked by the arrows in the chart below, which shows a sharp change in the country's floating oil reserves in the third quarter of 2022, corresponding to the beginning of a turning point in oil prices at that time. Will Trump recreate the situation of that year or reverse it?
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