Markets concluded last week with modest gains, but a lack of significant catalysts led to a subdued environment. President Trump's mention of 'flexibility' in reciprocal tariffs sparked late-day activity, though many view it as a rehash of obvious realities. Amid ongoing policy uncertainty and the absence of support from the Federal Reserve, market participants are cautious. Notably, while the dollar rebounded above 104, this movement seems more a pause in a downtrend rather than a reversal. The failure of the S&P to break above key technical levels also raises concerns moving forward.
The late-day risk rally seems like a bit of an over-reaction to a statement of the obvious in relatively thin trade.
I remain a rally seller, particularly with uncertainty on the policy front showing no sign of dying down any time soon.
On Friday, the dollar continued its recent rebound, reclaiming the 104 handle and closing above that level for the first time in a fortnight.
The absence of a 'Fed put' to cushion riskier assets adds to the bear case for the markets.
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