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The US and overseas markets have become tightly-linked, at least from the point of view of dollar-based investors. While there was a time when share prices here and elsewhere moved to their own tunes, that no longer seems to be the case. Emerging market returns have also become increasingly correlated to those of the US.
Larger US budget deficits will ultimately be financed by the Federal Reserve through monetary creation which promises to bring depreciation in the dollar both in terms of its foreign exchange rate and in terms of its domestic purchasing power. All these factors are very positive for gold over the longer run as is the strength of demand that will come in from Asian economies.
The failure of governments to reach a binding climate deal in Copenhagen has dented the confidence of carbon traders. They are now anticipating a global carbon price of €31 in 2020, compared with the €35 they were predicting last year. The carbon price is key to determining the extent to which carbon markets expand in the future.
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