Market volatility continued unabated last week, with the US CPI coming in 0.1% hotter than expected, both in the headline and the core readings. As a result, the USD rose, and yields spiked higher, while equities and precious metals consolidated their recent gains.

The higher-than-expected CPI print supported the US Dollar, but not all US data was as strong; retail sales and the NY Empire State Manufacturing index both disappointed. Last week, the DXY index rallied 0.7% to close at 103.446

The Euro and the Pound moved broadly sideways as EU & UK economic data was mixed. The EUR and GBP lost ground against the USD but rose against commodity currencies.

Commodity currencies were hit by the rising dollar and spike in yields, as these factors affect them more than underlying commodity prices. Last week, the CAD fell 0.4%, the AUD dropped 1%, and the NZD & NOK fell over 1.5%. Elsewhere in FX, the CHF sold off 0.8%, the JPY fell 1.3%, and the MXN was once again the day’s best performer, with a 0.5% gain.

Oil is still challenging to trade, with big weekly swings. Last week, WTI recovered all of the previous week’s losses and more, closing 4.1% higher at $80.97.

Precious metals were coming off a monster week and continued showing good strength. After removing new ATHs, Gold retreated slightly to close at $2,156 – but the macro prospects are still strong. Silver continued with strength, posting a +3.6% week and closing at $25.18.

Equities are still trading very well technically. Bears remain unable to gain traction, and every dip is quickly bought. Last week, the S&P500 index was flat at 5128 points, and the DAX rallied 0.7% to close at 17936 points.

Bonds are again trying to challenge important support, selling off strongly as inflation seems stickier than expected. Last week, the 10y UST yield rose 23bps to 4.31%, and it’s now looking to challenge the critical 4.35% level. The 10y Bund also fell, posting a 1.4% loss to close at 131.913.

Finally, crypto-currencies are experiencing a correction following their monster run higher. Sentiment has been extremely bullish for a while, and a move lower is undoubtedly needed to balance this out. At the time of writing, Bitcoin is off its all-time highs with a -3% week at $66,000. Ethereum is currently down over 10% at $3,500.

The Week Ahead:

The week ahead should be another hectic week, with a full calendar of economic data releases. We have interest rate decisions from the BoJ (expected to raise rates for the first time in years), the Federal Reserve (extensively anticipated to show more guidance on when their rate cuts will start), the Bank of England and the RBA.

Market Commentary: This communication is for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. All market prices, data, and other information are not warranted as complete or accurate and are subject to change without notice. Any comments or statements made herein do not necessarily reflect those of Coeus Capital. Coeus Capital does not assume any liability whatsoever for the content of this newsletter or make any representations or warranties as to the accuracy and completeness of any information contained in this newsletter.