00:00Paul, what a day, what a morning for the markets. Where is your focus?
00:06Yeah, morning, Tom. Well, I think that a lot of the market behavior was, as you might expect it,
00:11we've got a much higher oil crisis. Obviously, we've got weaker equities as well. We've got a
00:18stronger dollar, which I think reflects a couple of things, partly a haven bid and partly the fact
00:22that these days the US obviously is a net producer and exporter of oil as well. And then, you know,
00:29the outlier, I think, which is catching people's interest is Treasuries, which you might expect to
00:34be doing well as a haven bid, but it's actually are actually down a little bit. And I think there's
00:38a few different things people are looking at when they're taking that into consideration. One is the
00:42inflationary impact of higher oil prices, which, of course, is bad for the bond market. Maybe the cost
00:47if the US gets dragged into an extended conflict as well. And what that does for the government's
00:52spending plans. And I think that in addition to that, you know, maybe, you know, you could also say
00:58perhaps there's that sell America vibe at the back of people's minds for some of the holders
01:02of US Treasuries. I'm not convinced by that argument necessarily. And then there's the fact
01:06that maybe people are just using the bond market a little bit like a cash machine right now. If
01:10they're getting margin calls elsewhere, they need to raise funds from somewhere. The Treasury market
01:14is obviously a go to place in those kinds of situations because of its liquidity.
01:19Paul, you know that banks remain under pressure. Is that a separate thing to the Iran story or is it
01:24a look ahead to the nonfarm payrolls number? Well, the banks, I think, you know, in the US markets
01:31were already under pressure on Friday and that spilled over into Asia in quite a significant way
01:36today as well. I think there's a couple of extra things that people are worried about here. One is
01:40what we're seeing in the credit market where there'd be more wobbles in private credit exposure
01:45and lending and some instances of fraud allegedly. So markets obviously don't like that very much. And then as
01:53well as that these are the background noise of what's going on in the AI sector and how that can
01:58compete
01:59with financial institutions in various parts of their businesses. So a couple of reasons the banks would be hurt.
02:04They should at least enjoy the rising Treasury yields to a certain extent. So that may offer a little bit
02:09of support
02:09today, but wasn't really the case in the Asian session. Paul, it's interesting that you mentioned
02:16there could be margin calls driving perhaps some selling of Treasuries, but then we see gold prices
02:21actually going higher. Obviously, that's a haven play. But you might have expected the same margin
02:26call story to apply there. But metals seem to be a haven that's sticking this morning.
02:31Yes, and I think it's partly that diversification trade. People have seen just how strongly gold has been
02:37performing in all sorts of situations this year. And so people feel that that could be more rather than a
02:43hedge
02:43necessarily more, you know, kind of like an alternative asset, a way to a way to get ahead of things
02:48rather than a rather the safety bid, you know, a way to actually realize capital gains on an investment in
02:53this
02:54kind of a situation. And it's been such a globally strong asset. Gold. Yeah, I think doing a little bit
02:59better than some
03:00of the other metals prices. So it really is that kind of unique property that it is offering to investors
03:05that they like.
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