Bond Traders Are Flummoxed by ‘Slumpflation’
The copper-gold ratio signals slower growth, but inflation is the highest in years. What’s the bond market to do?
Buy or sell?
Photographer: Bettmann/Getty Images
The world’s biggest bond market just doesn't know what to do with the prospect of an all-out trade war instigated by the U.S.
On one side, there’s a strong argument that tariffs among the largest economies will stifle the global expansion and push yields in the $15 trillion Treasury market lower. Those concerns are appearing in the price of copper, the industrial metal often viewed as a barometer of economic growth. It’s falling relative to gold at the fastest pace since August 2015. That ratio is frequently cited by DoubleLine Capital’s Jeffrey Gundlach as worth watching to assess the next move in interest rates. Right now, that direction would appear to be lower.