RBC: We Are “Losing The Impulse”

Having repeatedly noted that his clients desperately held on to hope that the reflationary impulse would sustain despite the adverse series of events and geopolitical shocks over the past two weeks, RBC’s head of cross-asset strategy Charlie McElligott may have just stuck a dagger in their hearts, pointing out what we have been pounding the table on for the past three months, namely the fading inflationary impulse out of China, manifesting itself most vividly in the recent crash in various commodities, and iron ore in particular, which has tumbled 30% from recent highs.
In a note released on Tuesday morning, McElligott cautions that the market is “losing the [reflationary] impulse” and adds that while attention is focused on events out of the UK where Theresa May unexpectedly announced snap elections, “the ‘real’ macro story in my eyes overnight is the ongoing commodities fade originating out of China. Iron Ore continued its outright collapse (Qingdao 62% Iron Ore is -17.6% MTD and -30.2% from late February highs), while Aluminum, Copper, Zinc, Lead, Rubber, Gold, Silver, Rebar, Brent / WTI Crude, Gasoline and Nat Gas are all markedly lower.”

This post was published at Zero Hedge on Apr 18, 2017.