Today's Charts: What Markets Are Telling Us

04/25/2025 | Unsubscribe

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Good Morning!

Here are some compelling charts capturing the latest trends in US markets to help you understand what is going on amidst the heightened uncertainty (from multiple different perspectives):

📊 Safe Haven Flows:

This chart tracks "safe haven flows" — money moving out of regular stocks and into safer investments like gold, U.S. Treasuries, and low-volatility stocks (aka the “Safety Dance Index”).

• Orange bars going up mean more money is flowing into safe havens.

• Bars going down mean money leaves safe havens and returns to the stock market.

🟡 The yellow circle highlights a huge recent spike in early 2025 — one of the biggest in the last several years. That means investors just pulled a massive amount of money from the stock market.

🔮 What does it mean for the future?

This could signal investors are scared about a recession, inflation, geopolitics, or a crash. Historically, big spikes like this happen before or during financial stress. It doesn't guarantee a market drop, but it's a red flag that many are playing it safe right now.

It suggests caution and possibly more market volatility ahead.

📊 What’s this chart showing?

This is a U.S. 2–10 year yield curve chart from 2019 to 2025.

• It compares the interest rate (or yield) on 2-year U.S. government bonds and 10-year bonds.

• The white line shows their difference, measured in basis points (1 basis point = 0.01%).

🧠 What's the “yield curve”?

Usually, longer-term bonds (like the 10-year) pay more interest than short-term ones (like the 2-year) — because you're locking your money away for longer.

So in a normal economy, this difference is positive (above the 0 line, in green).

But sometimes, short-term rates go higher than long-term ones. A yield curve inversion (when the white line drops below zero into the red zone). It’s unusual — and kind of spooky in finance.

🧐 What does this chart tell us?

🔴 2022–2023: Big Inversion

• The curve was deeply inverted, around -100 basis points, one of the most inverted in decades.

• This aligned with fears of a recession due to high inflation and aggressive Fed rate hikes.

🟢 2024–2025: Recovery

• The curve is now moving back above 0 — called "steepening."

• This could mean the market expects inflation to cool off, the Fed to cut rates, and the economy to normalize.

📊 What this chart is showing:

This chart compares two things over time (from 2010 to 2025):

1. Black Line – The price of Brent crude oil is a primary global benchmark for oil prices.

2. Blue Line – The inverted total inventory of crude oil and oil products (gasoline and diesel). This shows how much oil is being stored worldwide, but the line is flipped (so a drop means more inventory).

The orange line is a model price based on historical inventory levels — it estimates what oil should cost when considering the available supply.

🧠 How to understand the relationship:

• If oil inventories (supply) go down, prices usually increase (less supply = more demand pressure).

• If inventories go up, prices usually decrease (too much oil = lower prices).

• Since the blue line is inverted, when it goes up, it means less oil in storage, which usually makes oil more expensive.

🧐 What's happening in the chart?

1. From 2010 to 2014: Inventories were low, and oil prices were high, around $100–$110 per barrel.

2. 2015–2020: Inventories rose, and prices dropped sharply — oil hit around $50–$60.

3. 2020 Crash: During COVID, demand collapsed, inventories surged, and oil prices crashed briefly.

4. 2021–2022 spike: Demand rebounded fast, inventories fell, and prices soared again, hitting $120+.

5. 2023–2025: Prices have settled in the $70–$90 range. Inventory and price are moving closely again.

The arrows at the end of the chart suggest something important is happening — possibly a disconnect between oil supply and price.

📊 What this chart shows:

🔼 Top part (blue line):

This is the price of gold from around 1980 to now (2025). You can see big climbs in the 1980s, 2010s, and again in the early 2020s.

⚠️ Middle part (black line):

This shows how far above gold is from its 200-day moving average (200-DMA) in percentage terms.

• Gold might be overheated or overbought if it is way above its 200-DMA.

• In this chart, the line hitting 25% means gold is 25% higher than its average price — that’s pretty extreme.

📉 Bottom part (the table):

Based on history, this shows what gold usually does AFTER it becomes 25% higher than its 200-DMA.

Each row is a past time this happened (dates going all the way back to the 1970s).
Each column shows how gold performed 1 day later, 2 days later, 3 days later, etc., to 1 month later.

Averages at the bottom:

• On average, gold tends to fall after these spikes.

• 1 week later: -2.33%

• 1 month later: -2.73%

• Only 29%–43% of these events saw positive returns afterwards.

🔮 What does it mean for the future?

As of April 21, 2025, gold hit 25% above its 200-DMA level again (see red arrow).

Based on history:

• There’s a good chance gold might pull back (drop) in the short-term.

• Historically, big spikes like this are often followed by cooling off or short-term corrections.

• It doesn’t mean gold will crash — just that it often takes a breather after big runs.

🧠 What is this chart?

This chart shows what happens in the market when people worry that the U.S. dollar might lose its global power or dominance (which is a big deal in economics and finance).

Each row shows a specific date when one of these “scares” happened.
Each column shows how different markets responded in the 10 days following that scare.

📊 What do the columns mean?

Here’s what each column tracks:

• 10-Yr Yield Drawup (bp) – How much the U.S. 10-year bond yield rose (a sign of shifting interest rate expectations).

• Dollar Index Drawdown (%) – How much the U.S. dollar fell in value.

• S&P 500 10-Day % Return – How U.S. stocks did over the 10 days.

• Gold in USD / EUR / JPY / CHF – How gold performed in different currencies (U.S. dollar, euro, Japanese yen, Swiss franc).

The colors make it easy:

• Green = strong positive return.

• Red = negative return (the darker, the worse).

• Yellow = kind of neutral or mixed.

📊 This chart looks at rare moments in history when three big things all happened at once:

1. U.S. government bond yields went up (which means bond prices dropped),

2. The U.S. dollar (DXY) got weaker, and

3. The stock market (S&P 500) fell.

That combination doesn’t happen often—because usually when stocks fall, investors run to either bonds or the dollar for safety. But in these cases, everything dropped. That’s a sign investors were panicking.

🟡 Where Does Gold Fit In?

The chart also shows how gold performed during these panic periods—not just in U.S. dollars, but in other major currencies too (like Euros, Yen, and Swiss Francs).

• In 2008, during the global financial crisis, gold went up in every currency. It was the one thing people trusted when everything else was falling apart.

• In 2025 (now), we’re seeing a similar setup: bonds, the dollar, and stocks are all falling again.

  • Gold is rising in U.S. dollars, but not in other currencies, which suggests fear—but not quite as global or intense as in 2008.

🧠 Why It Matters:

• When this combo happens, it’s usually a warning sign. Investors are losing faith in the usual safe places and may be turning to gold because it has no counterparty (you don’t need a government or bank to back it). If gold starts rising across all currencies, it could mean serious global concerns—like people questioning the dollar’s role or financial system stability.

That’s it for today!

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