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Wednesday, September 28, 2011

interesting... yield curve vs copper

I saw this chart, overlaying copper to the SP500, from the SeekingAlpha news feed, but originated from Doug Kass.

Obviously does not look enticing, by any means. But what I found more interesting was when the correlation broke.  Around Sept 12th.  What is interesting about this date is that it is the same date the market started flattening the yield curve.  The below chart is a 5-yr treasury in relation to the 30yr-treasury yield.

It makes me think. The divergence we are seeing may have more to do with yields than economic forces. (Also exaggerating Copper's decline today is the increase in margin requirements.)  But I am not an economist, and I do not know the forces that would make the flattening of the yield curve correlate to lower copper. (Other than a strong dollar.)

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