Equity markets were down last week, but on Friday, gapped up and closed near the highs. This was a very key bit of price action that not only saved last week from being very bearish, but also allowed for some bullish momentum to carry over into this week. We're starting to see some improvements under the surface of the market, and some important sector leadership emerge. Keep a close eye on healthcare these next few weeks.
Interest rates were down a little bit last week, but overall, are consolidating near the multi-year highs. The U.S. Dollar rallied to a +20-year high, but gave back some of those gains into the close. A pause in the dollar rally could benefit stocks and commodities, which could actually help alleviate some recession fears in the short-term. This would likely stem from a re-steepening of the yield curve, as a commodity rally would raise long-term rates. It seems as though recession has become consensus, so it may not happen as fast as most believe.
Cryptocurrencies are seeing a nice relief rally, but still nowhere near establishing a new bull trend. Precious metal markets are still vulnerable, while Crude Oil continues to consolidate.
A new Mercator Letter was just published yesterday. Check it out for our latest macroeconomic update, along with actionable trade ideas.