Weekly Memorandum 6/6/2022

Stocks were down slightly last week but are still holding a key price level that lends credence to the possibility that a temporary low is complete. We still need to clear an additional resistance level that was outlined in the recent Mercator Letter to confirm a bottom. We note that the inflation and energy trade continues to perform the strongest, which is in alignment with our expectations.

Bond markets continued lower as interest rates rose after a strong payroll report. This gives Fed more room to raise rates per the Taylor Rule. Crude Oil continued higher along with a few other commodities, which puts additional pressure on inflation expectations.

The U.S. Dollar continued its correction last week but overall remains in a strong bull trend, especially against the Japanese Yen and Euro currencies. Precious metals are still looking vulnerable, along with cryptocurrencies. Both are in bear trends.