Weekly Memorandum 8/8/2022
Stocks capped off a fairly constructive week, closing near the highs. We continue to observe leadership from key sectors like tech, which was the top-performer last week. This is especially important because this sector represents the largest component of the indices. Therefore, it's outperformance is likely to have a greater impact on the direction of the indices than other sectors.
Bonds had a strong week until Friday, when the strong payroll report emerged. The creation of 528,000 jobs in July gives the Fed additional cover to raise rates more aggressively to combat inflation, per the Taylor Rule. The U.S. Dollar appears to have solidified a higher-low with respect to its trend too, which is no surprise given the interest rate differential compared to other developed nations.
Crude Oil hit a new low but bounced strongly on Friday. The correction continues, although the longer-term trend remains upward. Precious metals had a strong week as well, and we remain keenly focused on Silver. Cryptocurrencies remain vulnerable technically despite the short-term bull run.