Tuesday's inflation report tested Monday's recovery. Stocks retained most of their gains, with equal-weight shares holding up particularly well, while Treasuries and metals came under pressure as yields and the Dollar rose. Oil continued lower, but Bitcoin slipped to another recent low. The benefit of cheaper energy is still competing with the prospect of tighter monetary policy.
Market Commentary
Lower oil prices and a recovery in metals were the more lasting developments of election week. Stocks gave back their initial relief rally, and Bitcoin returned to its lows. Treasuries held their ground, while Friday's stronger employment report helped the Dollar recover. Cheaper energy is welcome, but it has not produced a broad return to buying risk assets.
A projection being reached or invalidated doesn't necessarily mean it has lost its value. In fact, some of the most interesting levels can come from projections that are technically no longer active.
Read more →The midterm elections gave markets a clearer direction. Democrats won both the House and Senate, and Wednesday brought a broad relief rally alongside another sharp decline in oil. Equal-weight stocks advanced, Treasuries and metals recovered, and Bitcoin rebounded as the Dollar weakened.
Semiconductors remained the exception, extending the divergence we have been following.
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