US equity markets are stress testing important technical support levels just above the summer lows heading into what I view is a binary trade-tariff backdrop. Short-term momentum indicators, tracking 2-4 week swings, are oversold and beginning to bottom as equity indices attempt to stabilize at support. That suggests a rebound is poised to take hold.
What I find particularly interesting is the behavior of markets outside of equities, notably bonds, gold and few risk-on currencies. For example, as equities flip-flopped through the past week US 10- and 30-year Treasury yields diverged climbing to new weekly highs as did the risk-on euro-yen currency pair. In addition, gold broke its relative uptrend to copper, something that had been in place since April.
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