Equities started off last week in a very bearish manner, as we saw prices drop to new multi-month lows. The Nasdaq led the pullback, which is often an ominous sign. However, by Friday, we saw a solid rally that served to mitigate a considerable amount of the technical damage on the weekly timescale. It may have been a low of significance, but it's too early to tell whether it was the low. Even so, we remain below key resistance, and so long as that is the case, we are open to another washout lower.
Bond prices stabilized last week, but they remain in a solid downtrend, forming lower-lows and lower-highs. But if stocks continue their slide, we would anticipate a flight-to-safety trade to unfold. The only issue is the persistent strength of commodity markets, which is maintaining high pressure on inflation expectations. Interest rates tend to rise in response.
Crude Oil closed at its highest weekly level since October 2014 again. This commodity has been the primary driver of inflation. At the same time, the U.S. Dollar closed at a new multi-year high too. Typically, this relationship is inverse, but when they do rally together, it's indicative of overwhelming demand for hard assets. Cryptocurrencies also stabilized their decline, but remain in a solid downtrend. A new Mercator Crypto report will be published today, where we will update our outlook for Bitcoin, Ethereum, and BinanceCoin.
Lastly, there seems to be favorable opportunities developing in grain and livestock markets. Stay tuned for the announcement of our new service next week, which will cover these markets on a daily basis.