Now we have the "Gundlach Ratio" which is copper divided by gold. It actually makes sense. Here's the Gundlach Ratio (blue) along with the 10-year Treasury yield. pic.twitter.com/BrjRK6Y5z6
— Eddy Elfenbein (@EddyElfenbein) December 11, 2019
Today’s Chart of the Day was shared on Twitter by Eddy Elfenbein (@EddyElfenbein). It’s a chart of the Copper/Gold ratio in blue, compared with the US 10-year Treasury yield, in gray. As you can see, the Copper/Gold ratio and the 10-year yield are highly correlated. Eddy calls this ratio the “Gundlach Ratio” because legendary Bond trader, Jeffery Gundlach, frequently uses the Copper/Gold ratio as a leading indicator to forecast the direction of Interest Rates. In a conference call to his investors last night, Gundlach explained that the Copper/Gold ratio is suggesting that the 10-year yield will rise to 2% in the coming months. For more on why the relationship between the Copper/Gold ratio and Interest Rates exists, check out this paper.