A Possible Opportunity in Oil as Yields Search for a Bottom

By February 2, 2015November 19th, 2015Weekly Market Observations (Archives)

By Jim Dondero | February 2, 2015

  • While we continue to see deflation as the dominant theme for 2015, we also see a short-term countertrend opportunity for crude oil which appears poised for at least a bounce, and potentially a longer term, v-type, bottom.
  • US bond yields continue to trend lower, as they ‘converge’ toward those overseas. Yields on the 30-year US Treasury have now broken their 2008 and 2012 lows, while yields on the 10-year Treasury appear headed for a test of the 1.40% area.
  • Stocks in the US again moved sideways last week, with the broad market averages remaining within their recent trading ranges. Those overseas however have been responding quite positively to the ECB’s decision to purchase sovereign bonds, with the DAX moving to new highs.
  • Finally, the picture within the emerging markets remains mixed, and we believe security selection within countries that have tailwinds remains critical. While we remain quite bullish on India, those with commodity based economies are likely to struggle in a deflationary environment.

The views and opinions expressed are for informational purposes only and are subject to change at any time. This material is not a recommendation, offer or solicitation to buy or sell any securities or engage in any particular investment strategy and should not be considered specific legal, investment or tax advice. There is no guarantee that any of the forecasts will come to pass. Past performance is no guarantee of future results.