InterMarket R-EView

Short reviews of four of the largest global markets: US Interest Rates, US Dollar, Commodities, and US Equities and how they inter-act with each other. What does this mean to investors is added for context.

LayLine Asset Management Inc

Harry J. Campbell III, CMT

11/25/25

Wishing everyone a safe and very

Happy Thanksgiving

with family and friends.

LayLine Asset Management Inc

Harry J. Campbell III, CMT

11/11/25

Interest Rates

The three Rates covered (5yr, 10yr, 30yr) have drifted higher since the last InterMarket R-EView on 10/28/25.  This follows a similar pattern seen since the recent highs in mid-May when each move down is followed by a move up, but not to new highs, then repeats itself with a move lower that sets a lower low.  This is a classic down trend in Rates.  

What’s interesting, perhaps telling, is the 5yr is lower than it was at the beginning of the year, but the 30yr is slightly higher.  The 10yr is basically flat with the beginning of the year. This suggests that the bond market is still concerned with the level of inflation and at the same time concerned with growth prospect, represented by employment.  The FED is echoing this same sentiment.  They have lowered the Fed Funds Rates twice since September to stimulate growth (maintain full employment) yet at the same time expressing increasing concern about the level of inflation (price stability) remaining well above their 2% target, sticky is often the term used to describe the situation.

Of note, at the last FED meeting there were two dissenting votes against lowering the FED Funds Rate by .25%.  One dissenter wanting to lower the Rate by .5% and the other wanting to not lower the Rate, concerned with inflation.  Chair Powell strongly suggested that a decrease in the FED funds Rate was not assured at the December meeting, pushing back on the markets expecting another cut.  The FED constantly reminds us that they are data dependent.  But there has not been any official employment or inflation data since the government shutdown 40 days ago.  Needless to say, without the data they rely on so much, it’s very difficult to make an informed decision.   

US Dollar Index

The US$ continues its strengthening uptrend that started in mid-September with higher highs and higher lows.  Since the 10yr is basically flat since mid-September and Rates do affect the value of the US$ (higher Rates generally good for the US$) this suggests that the US$ is rising for other reasons (and there are plenty of potential reasons).  It does seem counter intuitive to think that the government shutdown would be good for the US$.  It's also unclear why tariff news since mid-September would be a positive for the US$, unless the markets think that the Supreme Court tariff decision, regardless of how they decide, will be good for the US$.  Perhaps international trade is starting to pick up and there is more demand for the US$ and or, folks are just plain short of US$.  Take your pick, nothing is clear cut.

Commodities

The GSG is at a new high for the year and since mid-August has been setting higher highs and higher lows.  It has also defended its 50-day MA (moving average of prices) and its 200-day MA.  All the hallmarks of a strong upward trend.  However, when the US$ is rising, all else being equal, commodities should be declining and they are not.  This is where the tariffs might be having some effect as tariffs do raise the price of commodities, regardless of the US$ strengthening, to the importer as they have to pay the tariff.  It was mentioned above that inflation was “sticky” on the high side and the increase in commodity prices may be part of the reason.  It’s difficult to decipher the economics but its sounds like a supply issue (less supply due to tariffs) rather than a demand (to much) issue. 

US Equities

US Equities continue their upward trend unabated since the low last April. 

Fundamentally, earnings growth continues to surprise to the upside.  At one point the earnings estimate for the 3^rd quarter was for ~8% growth, it now looks like it will come in around ~13% higher and as mentioned last month early earnings estimates have been consistently beaten for some time now.  Revenues have come in so far ~2% above estimates for the 3^rd quarter, now estimated to be ~8% revenue growth.  Earnings growth for the 4^th quarter is expected to be ~8%, but based on prior quarters it’s likely end up much higher.  For the full year of 2025, earnings estimate are for ~11% and for 2026 ~14%.  All of these numbers are above most historical averages.

Technically the story remains the same with generally positive technical indications.  US Equities continue to be positioned above both the 50-day MA and 200-day MA, although it has tested the 50-day MA twice in the last month or so for the first time since early May.  Not to get picky, as of today we have not set a higher high on this current move up, presenting a question about the trends continuation.  The 50-day MA is above the 200-day MA and both trending upward.  If you are wondering, US Equities are more than 10% above the 200-day MA, so any retest of that longer term trend indication would present a difficult correction. 

What Does This Mean To Investors?

Rates continue to move lower, the US$ is strong, commodity prices are rising, and US Equities continue to rise. What this means to Investors is the InterMarkets are pretty positive for investing, with that ever present caveat, for the moment.

LayLine Asset Management Inc

Harry J. Campbell III, CMT

10/28/25

Interest Rates

All three Rates covered (5yr, 10yr, 30yr) continue to move lower since the beginning of the year.  Looking below the surface there are some significant (for bond geeks) variations in the moves of each Rate we cover.  Since the beginning of the year, the 5yr. is down the most of the three, it’s lower by ~77 basis points (.77%).  The 10yr is lower by ~60 basis points, and the 30yr is lower by only ~24 basis points.  The general interpretation is the fact that the 5yr has moved more than the others we conclude that a weakening of the economy, as suggested by the lower 5yr, warrants more focus by the markets.  The 30yr is down the least, the inference is that inflation is not a major concern of the market.  The 10yr gives a nod to the concern of a weaker economy and to the notion that inflation is not much of an issue.

The FED meets today and tomorrow and most expect that they will lower the FED Funds Rate by .25% on Wednesday.  When the FED lowers Rates it suggests that they are more concerned about the condition of the labor market (weakening economy) then they are about price stability (inflation).  Not sure if the FED is mirroring the Rates market or the other way around, regardless they are in general agreement.

US Dollar Index

The US$ continues to move sideways as it has since mid-April, after trending significantly lower from the beginning of the year into April.  What’s notable is that since the tariffs were first discussed in detail, the US$ has been fairly stable.  Many thought the US$ would weaken due to trade concerns related to the tariffs.  So far, tariff issues have not negatively or positively affected the value of the US$ relative to other major global currencies.  Something to watch for is the Supreme Courts upcoming ruling on the legality of the tariffs and how that decision could affect the value of the US$.  The US$ is used in most international transaction and the ruling will affect both current and future trade activities, and as such, the value of the US$.

Commodities

The GSG is trying to break out to the upside from a multiyear sideways trend.  It’s currently above its 50-day MA (moving average of price) and the 50-day MA is above the 200-day MA and both are trending upward.  In other words, the trend is generally to the upside.  The only reason it’s not strongly to the upside is that the GSG has not been able to put in a higher high.  It has failed twice to do so.  Until there is a higher high, many will remain suspect of the upward move.

Not to dwell on the tariff story, but commodity producers, whose products are significantly influenced by tariffs, are probably holding back on shipping products until the Supreme Court rules on the tariff issue.  To state the obvious, it will be noteworthy which way commodity prices move when the Court announces it’s decision. 

US Equities

US Equities continue to climb higher, setting another all-time high today, the third in the last three days. This week about 20% of US Equities (SP 500) report earnings. 

In the last InterMarket R-EView I wrote, “The current earnings estimate for the 3^rd quarter is for about 8% earnings growth (year over year).  As a point of reference, the actual earnings for the 2^nd quarter came in at 12% (year over year).  Keep in mind that the actual earnings rate over the past couple of years has turned out to be consistently well above the earnings estimate going into each quarter.  Revenues (year over year) for the 3^rd quarter are expected to grow 6.3%, slightly below the 5 year average.  The P/E (price/earnings) ratio remains elevated at ~23, well above the 10-year average of ~19.  Many would consider the market expensive at that level, but it depends on what the growth rate of earnings going forward actually ends up being.”  I have not seen nor heard anything that alters the relevance of those comments.

On the Technical side, the move up over the past couple of trading days would appear to answer the rolling top question, its broken out to the upside above the consolidation level represented by the rolling top, with some force.  US Equities continue to be positioned well above both the 50-day MA and 200-day MA, with the 50-day MA above the 200-day MA and both trending upward.  This trend has existed since early July and the longer the trend, the stronger the trend.  Higher highs and higher lows adds even more muscle to the strength of the trend. 

Trends continue until they don’t.  I have mentioned tariffs and the Supreme Court case twice above and need to reference it again.  When the Supreme Courts announces its tariff decision, any reaction by US Equities is likely to be a convoluted affair.

What Does This Mean To Investors?

Rates are trending lower, generally good for the overall economy.  The US$ is stable, good for trade.  Commodities are firm but stable, good for prices.  US Equities continue to rise, that’s good.  The difficult issue revolves around tariffs.  What this means to investors is to watch for the Supreme Court’s decision on tariffs and have a plan in mind.

LayLine Asset Management Inc

Harry J. Campbell III, CMT

10/14/25

Interest Rates

All three Rates covered (5yr, 10yr, 30yr) continue to drift (trend) lower, with classic Technical precision, lower highs and lower lows.  The 5yr and the 10yr hit their recent highs around the beginning of the year.  The 30yr put in its high mid-May.  This suggests that the trend lower is stronger for the shorter duration Rates than the longer Rates.  Loose translation, weakness is evident in the economy (evidenced by the lower 5yr) and still some concern for inflation (30yr down trend not as strong).  The 10yr is leaning towards the idea of a weaker, less growthy, economy.

The FED meets in a couple of weeks, with the markets assuming another .25% cut in the FED Funds Rate.  What makes this meeting somewhat unique is that the FED has often said that it is “data dependent” in their forecasting analysis.  Unfortunately with the federal government shutdown, much of the “gold standard” data the FED relies on is unavailable.  The natural question is how are they going to make a Rate cut call without the data.  Perhaps they will just have to make a judgement call and when the data does come in they can judge the quality of their call.  That will be interesting.

US Dollar Index

The US$ continues to rise in an upward trend that commenced in the middle of September.  It’s back to about the same level it hit shortly after the tariff news was announced in early April.  With all the consternation about the so called low value of the US$ and a loss of reserve status, it’s worth considering that it is only low compared to the last three years.  Before that, the US$ was at about the same level as it is now from 2014 to 2022, and from mid 2003 through 2014 it was substantial below its current value.  The US$ did not lose its reserve currency status back then and it’s highly unlikely it would now. 

The value of the US$, weaker or stronger, that we refer to in this InterMarket R-EView is comparing the US$ to a basket of the largest global currencies.  While at any given time the US$ may be stronger against the EURO and weaker against the YEN, utilizing the DXY allows us to look at the value of the US$ relative to foreign currencies in general.  This is important when we are in such volatile trade circumstance with US global tariffs,  The US$, as global reserve currency is used in most international transaction. The value of the US$ influences every one of those transaction.  A stronger US$ makes it less expensive for US$ holders to buy goods that are priced in a weaker currency, but makes US produced and priced goods more expensive for those with a weaker currency to buy (and visa versus).  It just depends on what side of a transaction one finds themselves on.

Commodities

The GSG is still tracking sideways as it has since April and is hovering just slightly above where it started the year.  The US$ influence on commodities has been muted since April, however since the beginning of the year the US$ is lower in value.  Considering the standard InterMarket relationships between the US$ and commodities, with a weaker US$, commodities should be higher and they are not appreciably higher.  Some of the flatness in commodity prices can be explained by generally flat prices in the energy markets, particularly with oil, but not all. This leaves us with those twin pillars of economics, supply and demand to explain away the remainder.  Flat commodity prices suggest either a general lack of demand, or an abundance of supply, or the catch all, a combination of the two.  As has been said here on numerous occasions, US tariffs have disrupted the commodity supply chains globally.  Until there is some confidence in the landed costs of products being exported to the US, I’m going suggest that while producers are still producing, less is getting shipped, so the excess produced commodities are being inventoried, creating a surplus of inventory, holding prices from going up even as the US$ has weakened over the year.

US Equities

The earnings season officially started today with several of the big banks reporting.  The current earnings estimate for the 3^rd quarter is for about 8% earnings growth (year over year).  As a point of reference, the actual earnings for the 2^nd quarter came in at 12% (year over year).  Keep in mind that the actual earnings rate over the past couple of years has turned out to be consistently well above the earnings estimate going into each quarter.  Revenues (year over year) for the 3^rd are expected to grow 6.3%, slightly below the 5 year average.  The P/E (price/earnings) ratio remains elevated at ~23, well above the 10-year average of ~19.  Many would consider the market expensive at that level, but it depends on what the growth rate of earnings going forward actually ends up being.

I wrote this about the Technical setup in the 9/9/25 InterMarket R-EView.  “The Technicals continue to be supportive of US Equities, as they maintain a position nicely above both the 50-day MA (moving average of prices) and the 200-day MA, with the 50-day MA well above the 200-day MA and both upward sloping, a positive technical picture.  The rate of upward change has slowed appreciably since late July as the level of tariffs are becoming better understood.  In technical parlance, after the rapid move up since April, a slowing rate of change suggests the early stages of a rounding top, not exactly what we want to see as we head into a traditionally difficult time of the year for US Equities.”  A rounding top can be looked at as a consolidation process where the market is trying to adjust to a prior runup in prices.  It gets resolved when the market determines either it has gone too far, too fast, and the market drops, or that the price level is appropriate and the market starts to move up again.” 

Only one thing has changed since that was written. US Equities are now challenging the 50-day MA from above, but have not broke below.  Even with a break below the 50-day MA, considering that the 200-day MA is quite a bit lower, Technically we need to wait for some sort of confirmation before coming to any conclusions as to which way we are technically likely to head. 

What Does This Mean To Investors?

Rates are trending lower, bond prices higher, indicating institutional support for Treasuries at these Rates.  The US$ is starting to move higher indicating general support for the US$ even as Rates decline.  Commodities are flat, demonstrating some balance in supply and demand. US Equities continue to move upward, but with a slower ROC (rate of change) suggesting a level of consolidation.  What this means for investors is, for the moment, the markets appear to be in relative balance.

LayLine Asset Management Inc

Harry J. Campbell III, CMT

9/23/25

Interest Rates

All three Rates covered (5yr, 10yr, 30yr) have risen since the FED cut it’s FED Funds Rate last Wednesday.  If that sounds odd, it is, except in recent times.  Last year the FED cut the FED Funds Rate by 1.00% between September and December and Treasury Rates went up ~1.00% during that time.  It’s too early to tell if the same dynamic is setting up, but it is worth taking note of. 

The most common reason thrown out as to why the bond market would sell off (Rates rise) when the FED was lowering Rates is that the market is concerned that the FED is giving in, or up, on their fight to lower inflation.  Looking at the numbers from last year, inflation rose from 2.4% in September 2024 to 2.9% in December 2024 as the FED was lowering the FED Funds Rate.  Looks like the bond market had it right as their concern for inflation proved correct.  So far this year inflation has gone from 3% in January, down to 2.3% in April and has been on the rise since April, now residing back around 2.9%.

The conspicuous question is why would the FED lower Rates when inflation was on the rise in 2024 and after seeing what happened repeat the same exercise in 2025.  The FED would suggest that the full employment side of their dual mandate (price stability being the other side) took precedence over price stability.  In other words it was better to allow inflation to linger above their 2% target for a longer time period rather than take a chance on higher Rates squashing the economy.  Time will tell whether that was a good decision.

US Dollar Index

The US$ continues to hold a flat line since mid-June after dropping in rather dramatic fashion starting at the beginning of the year.  One of the factors that determine the relative value of the US$ are interest Rates.  However, how does one explain why the US$ rose last fall as the FED was lowering the FED Funds Rate.  The short (therefore incomplete) answer is that while the FED might have been lowering Rates, the bond market was pushing Treasury Rates higher and the US$ reacts to the Rates in the Treasury markets, not to what the FED is doing.  Looking at the here and now the US$ is slightly higher since the FED lowered the FED Funds Rate last week, but as mentioned above, Rates on Treasuries have moved up since then and the US$ is following suit.  The US$ did drop as the New Year began, which also coincided with the 10yr dropping rather significantly, for Rates at least.  Based on what we have seen over the past year we can expect the US$ to trend with the Rates in the Treasury market, irrespective of what the FED is doing with the FED Funds Rate.

Commodities

The GSG continues to trade in sideways pattern within a technical formation referred to as a triangle or wedge.  I bring up this Technical pattern as it has a tendency to end in dramatic fashion.  As the price moves closer to the apex of the triangle, where the upper and lower sides meet, it signifies that the trading is getting compressed.  Think of it like a spring.  Squeeze a spring between your fingers and the spring compresses.  However there is only so far you can compress it.  Eventually it’s going to spring out from between your fingers in a dramatic, yet random direction.  Technically this is what happens when the price reaches the apex of the triangle, suddenly the price moves in a dramatic fashion, but not in a direction that can be known ahead of time.  This is a long way of saying technically we expect commodity prices to move dramatically, we just don’t know whether it will be up or down, just that they are very unlikely to continue at the same price level.

US Equities

US Equities continue to put in new all-time highs and unlike in the last InterMarket R-EView, the ROC (rate of change) has accelerated, rather than flattening out as it had been.  So much for the seasonal challenges of this time of the year.

Fundamentally, there is not much to say.  In a couple of weeks we start a new earning season for the 3^rd quarter.  The estimates (guesses) are all over the place with a bias for another fairly strong earnings season, as evidenced by the move higher over the past couple of weeks. 

Technically, the old line “the trend is your friend” certainly comes into play here.  Higher highs and higher lows combined with a very strong positively correlated moving average setup suggests more upside.  In addition, most of the common Technical indicators are in what is often described as “over bought” territory and until there is a clear break in the indicators, as most Technical practitioners know, markets can stay over bought way longer than one would think. 

What Does This Mean To Investors?

It appears that the FED wants to get the FED Funds Rate lower. What this means to investors is to watch the Rates in the Treasury market, if they don’t stabilize or go lower, inflation will be perceived to be persistent, with all the associated ramifications for the InterMarkets. 

References:

5yr: 5 Year Treasury Yield (FVX)

10yr: 10 Year Treasury Yield (TNX)

30yr: 30 Year Treasury Yield (TYX)

US$: On 9/24, Switched from Invesco DB (Deutsche Bank) US Dollar Index Fund UUP to DXY, ICE US Dollar Index.

GSG: On 2/11/25, iShares S&P GSCI Commodity Index replaced the DBC: Invesco DB (Deutsche Bank) Commodity Index Tracking Fund, as our commodity index.

Yield Curves: The difference between the 5yr and 10yr, and between the 10yr and 30yr.

FED: Federal Reserve

ECB: European Central Bank

US Equities: S&P 500

EURO: Eurozone Currency

YEN: Japanese Currency

IMF: International Monetary Fund

CMT: Chartered Market Technician

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