Market Themes: NO chance of rate hike, NO Deflation - USD

This is a year-to-date chart scaled on a percentage basis that outlines the relationship between the US Dollar, 20 yr+ Treasuries, Gold, Energy (think oil, gas etc), the Euro, and the US Real Esate Index. These represent the different investment classes in the market (rate-sensitive instruments, earnings sensitive instruments, and hard assets).

As you can see there is a huge disparity with US Dollar, Treasuries, and Real Estate at highs while Gold, Energy, and the Euro is quite low.

What this implies thematically is clear: The market currently believes there is NO chance of a rate hike (see treasuries, real estate), that there is NO chance of deflation (see EURO and Dollar relationship, and Gold / Energy underperformance) and, although it is not shown since the chart was getting cluttered, there is no indication that corporate earnings are at risk.

Follow this chart because these themes are where you should be focusing your asset allocation.