It’s a new reign, and volatility is king. Early this week, Japan faced a new rendition of 1987’s crash, while the US VIX index briefly shot up to a four-year high of 65. As for our friendly neighbourhood commodity, Brent, after selling off to the troughs of $75/bbl this week, we saw the prompt contract limping back to $78/bbl. And how did all of this begin? Record scratch to the past no one has a (definitive) clue! Markets suspect the gloom and doom of a possible US recession stoked the fire amid abysmal manufacturing data and rising unemployment. “Carrying” this forward into this week may have been the yen carry trade causing “the great unwind” of bullish sentiment amid the Bank of Japan taking a short-lived hawkish turn. Brent likely sold off amid the hullabaloo in surrounding markets, with fundamentals hardly sound enough to prop things up. Although 07 August’s EIA stats reported a third consecutive draw, gasoline supplies continued to build a bear in both stocks and a falling product supplied (a proxy for demand). It’s safe to say that the Bears have won the gold this week, with sentiment standing far behind in the heats. For now, safeguard your assets and your hopes.
