The word “stagflation” has become increasingly popular in the US economy, as inflation remains sticky and economic data continue to disappoint. The US debt situation is also attracting much attention, as the deficit is still growing at an alarming pace.

The US Dollar avoided a second consecutive down week, but its rebound was modest. The DXY index edged up 0.2% to close at 105.314, setting the stage for the eagerly awaited US CPI print next week, a crucial event sure to capture everyone’s attention.

The Euro and the Pound had another uneventful week, with economic data presenting a mixed picture. The Bank of England’s decision to maintain rates was not unexpected, but the surprise came as a non-unanimous vote, with two members advocating for a 25bp cut. On the other hand, UK GDP was pleasantly surprised with a 0.6% QoQ reading, adding an element of unpredictability to the market.

Commodity currencies, as did most major currencies, had a very quiet week. The AUD, NZD, CAD, and NOK were broadly unchanged last week. Elsewhere in FX, the CHF fell 0.2%, and the JPY gave back some of its post-intervention gains with a 1.8% weekly loss.

Oil had a flat week for a change—the WTI closed the week marginally higher at $78.13.

Precious metals recovered after the previous week’s move lower, and the macro environment is still very favourable for hard assets. Last week, Gold rallied 2.6% to $2,360, and Silver shot over 6% higher to close at $28.17.

Equities performed well, as predicted last week, and the path of least resistance remains to the upside. The S&P500 index gained 1.6% to close at 5219 points, and the DAX rallied 4.3% to 18773 points.

Bonds had a quiet week as the focus shifted to central bank rate expectations again. The 10-year UST yield fell 2bps to 4.50%, and the 10-year Bund fell 0.2% to close at 130.857 points.

Finally, crypto-currencies failed to retain their correlation with risk, as they saw further selling pressure. This frustrates bulls, who undoubtedly were expecting much better performance with the recent ETF launch and the halving. At the time of writing, Bitcoin is over 4% lower at $61,000, and Ethereum is trading heavy 7% lower at $2,910.

The Week Ahead:

Next week, all eyes should be on inflation data, with the main focus being the US CPI. We also have inflation readings from the Eurozone, Japan, and Switzerland and earnings data from the UK.

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.