The previous week, we had seen a rally in both bonds and equities, but last week was different; equity indices moved higher (with the S&P500 making new all-time highs), but bonds sold off.

The US Dollar resumed its upward trend in 2024, getting help from rising US yields. Last week, the DXY index rallied 0.8% to close at 103.239.

The Euro performed relatively well, even though there was an absence of any significant economic data releases.

Economic data from the UK was mixed, with inflation coming out hotter than expected but average earnings disappointing to the downside. The Pound fell marginally against the Dollar, was flat against the Euro, and gained ground against most other major currencies.

Commodity currencies had already shown underperformance in the previous week (when they should have been rallying); last week, they continued to perform poorly. The AUD fell 1.3%, the NZD and NOK lost 2%, but the week’s best performer was the CAD, which closed broadly flat vs. the USD. Elsewhere in FX, the CHF dropped 1.8%, and the JPY crashed 2.3% lower.

Oil remains volatile with decent intraday swings, but no clear direction remains. Last week, the WTI took back most of its recent losses, closing 0.9% higher at $73.39.

Precious metals had underperformed while yields were falling, and they continued to underperform as yields rose last week. There seems to be very little love for metals now, which is undoubtedly frustrating bulls. Last week, Gold fell 1% to $2,029, and Silver dropped 2.5% to close at $22.62.

Equities remain in a clear bullish trend despite many macro arguments for lower levels. The path of least resistance is still to the upside, and shorts should be very careful. Last week, the S&P500 index rallied 1.4% to close at 4845 (new ATHs), and the DAX fell 0.9% to close at 16555 points.

Bonds reversed the previous week’s rally, showing yet more weakness. Last week, the 10y UST yield rose 19bps to 4.13%, and the 10y Bund fell 1.1% to close at 134.158 points.

Finally, crypto-currencies continued to sell off following the Bitcoin ETF, and bulls are getting frustrated. The underperformance is substantial for now, given the equities rally. At the time of writing, Bitcoin and Ethereum are down around 3%, at $41,600 and $2,480, respectively.

The Week Ahead:

The week ahead should be interesting, primarily due to the S&P500’s new ATHs. Will this move continue higher? Longs are still in control, so the likely answer to that question is ‘Yes’.

Data-wise, we have interest rate decisions from the BoJ, the BoJ, Norges Bank and the ECB (with no change expected). We also have Manufacturing and Services PMIs and the latest US GDP print.

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.