Ok, so we have been banging on about delusional prospects for the oil price for ages so a 20% fall in Brent pricing in recent months is no huge surprise. But who would have picked the following as the other side of that trade?
As you know we have merely pointed to supply/demand equilibrium as being the flaw in strong oil price theses so we wouldn’t necessarily see a falling oil price as a deflation bet. In fact, with the Saudis recently dropping their oil prices you could easily consider a conspiracy to screw the Russian economy. That’s for another day’s debate and sticking with the possibility of a deflation bet whoodathunk at the beginning of this year that US 30-year bonds would rocket by more than 20% in value? Stunning stuff and not one we would have bet on. Chart is courtesy of stockcharts.com :
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