Founders: UBS Says As Bonds Rally, The Dollar Will Drop From Large CTAs
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MACRO TRADING COMMENT:
We don’t normally put a lot of credence into CTA behavior as a market driver in bonds. But once in a while, during EOY seasonality, (as in Gold/Silver/Oil) they can assert dominance in Bonds in driving a trend. And as ZH has pointed out, CTAs are very, very short bonds now
As the Bond market sold off these past few weeks, The dollar did well, right up until the Israeli War started. (See pic below)
Therefore as the Bond market rallies, should we expect the dollar to sell off marginally, and Gold to drop? All things being equal probably somewhat yes.
But Gold rallied for Geopolitical (War) reasons, not dollar correlations. They wanted the gold despite the Dollar. Next they will want the Gold because of the dollar if we are correct.
Gold did not rally because Bonds Dropped as many are saying…
