Financial markets have already had an unusual year, but recent price action lately has been especially bizarre, according to Robin Brooks, a senior fellow at the Brookings Institution.<\/p>\n
In a Substack post on Tuesday<\/a> titled \u201cSuper weird markets since Jackson Hole,\u201d he traced the path of key assets since Federal Reserve Chairman Jerome Powell opened the door to rate cuts<\/a> in a speech at the annual central bank symposium last month.<\/p>\n \u201cYou\u2019d have thought that would weigh on the Dollar, lift the S&P 500 and boost commodity prices across the board. But that hasn\u2019t happened,\u201d Brooks wrote. \u201cThe only thing that\u2019s moved is gold, with a massive price rise of almost 10 percent.\u201d<\/p>\n To be sure, stocks have rallied since his post as benign inflation data<\/a> cleared the way for Fed rate cuts when policymakers meet on Tuesday and Wednesday. Gold prices have also marched higher, setting fresh highs along the way and closing Friday at $3,680.70 per ounce.<\/p>\n But the bond market has behaved more unexpectedly. Brooks noted the 30-year Treasury yield didn\u2019t fall right after Powell\u2019s speech but only turned lower after another bad jobs report was released two weeks later.<\/p>\n \u201cThe fact that the 30-year Treasury yield didn\u2019t fall immediately is weird and worrying,\u201d he added. \u201cIt took very weak payrolls to finally do that.\u201d<\/p>\n In addition, while the dollar index has had some ups and downs, it has returned to about where it was before Powell\u2019s speech, with Brooks calling that \u201ccounterintuitive\u201d as expectations for Fed easing would typically bring it lower.<\/p>\n Meanwhile, bitcoin sold off after Jackson Hole but is also back where it started, even though cryptocurrencies have generally acted like risk assets in the past and previously rallied on rate-cut hopes.<\/p>\n \u201cWhat does all this mean? Recent market moves suggest gold is the ultimate safe haven,\u201d Brooks said. \u201cBitcoin is proving too volatile and speculative, so \u2014 as political pressure on the Fed mounts \u2014 markets gravitate to gold.\u201d<\/p>\n Fears of a debt crisis in France and the U.K. have jolted global bond yields higher in recent weeks. Political gridlock in France in particular has dimmed hopes that Paris will rein in deficits anytime soon.<\/p>\n