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Weekly Memorandum 10/19/2020

Stocks were modestly higher to start the week, although they already gave back most of their gains since the opening bell. Last week was another decent one for equities, but we saw a similar theme play out Friday. That is, most of the gains were given back by the end of the day. Even so, price action across the equity indices remains constructive, and we are starting to see leadership emerge across small-caps and foreign markets, which is a good sign.

Bonds were down last week, as we saw Treasury prices creep lower while rates rose slightly. T-Note prices formed their peak in March of this year, in the middle of the corona-crash. It could turn out to be a very important high. But if we look under the hood of capital markets, we see a steepening yield curve, and tightening credit spreads. We pointed this out last week too, and stated, "None of these are hallmarks of imminent economic doom on the horizon."

Commodity markets had a decent week, but precious metals were marginally lower. Crypto was quiet too, as many markets continue to posture themselves for the outcome of the presidential election. A new Mercator Letter will be published this Sunday, October 25, where we will update our macroeconomic and geopolitical outlook, as well as providing subscribers with actionable trade ideas.

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