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

3/10/26

Interest Rates

All three Rates covered (5yr, 10yr, 30yr) are higher so far this month, reversing about half of the drop in Rates during February, putting Rates about in the middle of a strengthening sideways channel.  Rates are also about at the same level as when the tariffs were first announced back in April 2025.  Rates did rise immediately following the announcement of the tariffs, hitting cycle highs in May before starting to trend lower to where we are now.  Interestingly, it was thought at the time that tariffs would be inflationary, pushing up inflationary pressures that would force the FED to raise Rates, slowing the economy.  Instead the FED ended up lowering Rates last fall.  Conclusion, tariffs did not affect Rates over the longer term.  The FED is meeting next week to decide what to do with the FED Funds Rate, most think it will not change. 

Part of InterMarket Analysis is considering the impact of war on the InterMarkets.  War impacts the costs to the economy by pushing up both Rates and commodity prices.  Rates have risen and commodity prices are up since the war began.  It will be telling what the FED says next week about the effect of war on their decision on Rates.

US Dollar Index

The US$ strengthened when the war was announced and has continued its strengthening cycle that commenced in late January.  Oil is traded in US$ (for the most part) and given the sharp increase in oil since the war started, it makes sense that demand for the US$ would increase as more expensive oil was bought and sold requiring more US$ to cover the increased transactions, pushing up the value of the US$. 

However, the US$ is still in the middle of a long sideways channel that goes back to the start of the tariffs.  Keep in mind that the US$ dropped from near historical highs down to the range we are in now in the first half of 2025 and has trended sideways since.  The impact of the war on the value of the US$ is far from certain, but for the moment the US$ appears to be strengthening.

Commodities

As would be expected at even the hint of war, much less a break out of fighting, commodities are going to rise, in this case particularly petroleum products, and they did.  Oil jumped from the mid $70 last Wednesday to over $110 on Monday morning and then back down to the mid $70 by today.  Shorter term commodity price increases will be absorbed by the economy, by both producers and consumers, however, the longer commodity prices remain elevated and the US$ remains strong, over time, the more worrisome a spike in inflation gets.  This will certainly make the FED Rate decision next week more complexed.

The GSG is now higher than it was when it peaked in early 2022 and we need to go back to late 2014 to find higher commodity prices then today, at least on the index level.  This means that for the past 12 years overall commodity prices have been lower than they are today and yet we have had a rather substantial bout in inflation during that time.  To the causal observer it would appear that lower commodity prices do not hold inflation down, or to put it another way, commodity prices were not the cause of the inflation of the past decade or so.

US Equities

US Equities continue to drift lower since hitting a recent high in late January.  The start of the war has added some haste to the downward trend. 

Normally we would discuss fundamentals, revenue growth or earnings estimates, however, the length of the war will challenge any current analysis   For example, if over time oil remains extremely elevated, it would cause a reduction in consumer derived revenues and reduce earnings due to the increased costs associated with much higher energy costs.  Earnings season starts again in April, it will be interesting to hear forward guidance.

Technically, US Equities are below their 50-day MA (moving average of prices) and have challenged it from below several times only to be repelled. In technical jargon that is referred to as confirmation of downward pricing pressure.  US Equities are positioned halfway between the 50-day MA above and the 200-day MA below.  The 200-day MA is for many a level of support, that proverbial line in the sand, that requires attention.  As a reference, US Equities have not been below its 200-day MA since May of last year.  The translation is if US Equities trades lower than the average of its prices over the last 200 days, it is losing momentum and support from investors.  We are not there yet, but its being watched very closely.

What Does This Mean To Investors?

From an InterMarket point of view all that really matters is what has happened since the war started: Rates are rising, the US$ is strengthening, Commodity prices are higher, and US Equities are showing some weakness.  What this means for Investors, for everyone’s sake, let’s hope that the war ends quickly.

LayLine Asset Management Inc

Harry J. Campbell III, CMT

2/24/26

Interest Rates

All three Rates covered (5yr, 10yr, 30yr) have been moving lower since the beginning of the month. They have each moved down roughly the same amount, about 25 basis points (basis point is 1/100 of a percent) or ¼ of a percent each. That may not sound like a lot, but when you look at the corresponding price move in the underlying bonds, especially long dated, its noticeable. Looking at the TLT, (iShares 20 Year plus Treasury Bond EFT that moves similar to the 30yr) so far in February the price of the TLT has risen ~3.2%.  So a one quarter of a percent move down in Rates, specifically the 30yr, resulted in a ~3.2% move up in price of the TLT. An example of small moves in Rates can result in large price changes in the underlying bonds.

In case you are wondering, a quarter of a percent move in one bond will not result in the same price move in different bond that moves the same quarter of a percent, there are way too variables.  In the example above both the 5yr and the 30yr moved down about a quarter of a percent during February.  However, while the price on the TLT moved up 3.2% in price as a result of the drop in Rates, the IEI (iShares 3-7 year Treasury bond ETF that moves similar to the 5yr) is up only .8%.  The same quarter point move down in Rates resulted in vastly different price moves over the same period of time.  The complicated nature of pricing bonds makes it quite difficult to judge price from moves in Rates except, as one goes up the other goes down.

US Dollar Index

The US$ has been tracking sideways, with an upward bias, for the month of February.  The current short-term down trend that started in late November continues for the moment, but since late January a short-term reversal trend, upward, has been developing.  We have the higher low, but need the higher high to confirm a change in the short-term trend.  There is still quite a bit of work to be done to the upside to reverse the longer-term down trend for the US$ that started in early 2025.  Technically, the 50-day MA (moving average of prices) is below the 200-day MA and both are trending down, not a confidence building formation if you are looking for a stronger US$.

Commodities

After moving lower for the first part of February, the GSG has moved up aggressively to challenge the prior high from late January.  In other words, the upward trend in commodities that commenced around the time when the tariffs were first announced in April, not only continues, but has gained Technical strength since the 1^st of the year.  It will be instructive to see how commodity prices adjust to the new tariff regime, but given the insane level of complexity injected into international trade by these changes in tariffs, it will take some time to culminate in a price trend in commodities.

US Equities

US Equities are now at about the same price as late last October, four months ago.  Lots of ups and downs, but no real progress in any direction.  Markets that are flat like this for some period time are often referred to as a consolidating market.  Market participates are waiting, biding their time, for indications if things are going to get better, worsen, or stay the same so they can buy, sell, or hold.  These consolidation periods can last a long time, a year or more in some cases.  Consolidation phases generally (I’m sure there is an exception) take place after long and substantial moves up in US Equities.  For example, after the strong move up from early 2012 to the beginning of 2015 US Equities basically went flat from the beginning of 2015 until the end of 2016 before moving higher again.  To be clear, during that long flat there were several sharp moves down and then back up, but no real progress made for almost two years. Some consolidation phases don’t end well suggesting that market participants during the consolidation phase determined the market had gotten too expensive and needed to be repriced. Consolidating markets are frustrating to get through, requiring investing patience.

What Does This Mean To Investors?

Rates moving lower even as inflation has strengthened suggests market concern about economic growth.  With the US$ biased to the downside it makes sense that Commodity prices are on the rise, adding to market concern.  US Equities are flat, waiting for something to happen before making its next move.  What this means for investors is, patience is a virtue.

 LayLine Asset Management Inc

Harry J. Campbell III, CMT

2/10/26

Interest Rates

Since the beginning of the month all three Rates covered (5yr, 10yr, 30yr) have drifted lower, but they remain about flat year to date.  Looking back a year, the 30yr is about flat but both the 10yr and the 5yr are lower than they were one year ago.  For perspective, almost exactly one year ago both the 5yr and the 10yr were at cycle highs, the 10yr at 4.66 and the 5yr at 4.5.  Today the 10yr is at 4.14 and 5yr is at 3.69.  The 30yr did not hit its cycle high until late May at 5.15, currently at 4.78.

The reason for the short history lesson is to draw some conclusions from the last year.  1) The 30yr was flat therefore it concluded there has been little in inflationary impulses from either monetary or fiscal support for the economy.  2) The 5yr is lower, the conclusion here is that there has not been enough economic growth to stimulate demand for credit necessary to lift short Rates. 3)  The 10yr is also lower over the last year concluding that there was little inflationary impulses over the last year b/c there was not enough economic activity to support higher prices or push Rates higher.

US Dollar Index

The US$ is exhibiting some technical weakness including the negative implications of lower lows and lower highs since last November, and the 50-day MA (moving average of prices) has failed to hold a cross above the 200-day MA and is now trending lower.  This shows a classic lack of confidence in the idea of a strengthening US$, at least for the moment.  That is, its hard to develop any consensus on the direction of the US$ until there is some stabilization in global trade related to the US tariffs.  The US$ current round of weakness coincides to the introduction of US tariffs last year.  It can be looked at in one of two ways; one is that the tariffs reduced the demand for the US$ as non US$ denominated goods and services were sought out as alternatives to US goods and services.  The other is the increase in costs associated with the tariffs has reduced overall US destined trade demand.  Either way it’s going to be a challenge for the US$ gain much strength as long as the tariffs are in place.

Commodities

The GSG is responding to the weaker US$ by moving up well above the upper side of the sideways channel it had been tracking in for several years.  Since the beginning of 2026, commodities have risen sharply just as the US$ has weakened noticeably.  Commodities do respond to more than just the US$ (i.e. supply and demand), but the US$ is weaker than it has been for some time and that weaker US$ (pushes prices higher) has combined with the added costs associated with tariffs and commodities are responding by moving higher. 

US Equities

US Equities may be making new record highs, but the slope of the rise in US Equities is and has been flattening out.  Slow progress comes to mind.

Fundamentally, we are about 2/3 of the way through earnings for the 4^th quarter and they are coming in in line with most expectations.  EPS (earnings per share) in the 4^th quarter grew about 13%, with revenue growth coming in around plus 9%.  If you are wondering, estimates for 2026 earnings growth is about 14% and the forward P/E ratio (price/earnings) at around 22, which is above the 5 year average, and as such, US Equities remain fairly expensive.

Technically, US Equities continue trending upward, even if that rate of change is slowing.  The 50-day MA has maintained its position well above the 200-day MA, a positive technical indication.  However, the lack of higher highs and higher lows since the beginning of the year suggest some trepidation to pushing prices higher.

For those interested in market lore (not advice), the popular saying “as goes January so goes the year” suggests odds are for a positive year ahead. 

What Does This Mean To Investors?

In summary, the Rates market is not concerned about inflation and that the economy is challenged.  However, US$ weakness and tariffs have cued up higher prices, as evidenced by the higher commodity prices, challenging the Rates position on inflation and US Equities are still trending upward, albeit at a slow pace, challenging the Rates markets view on a challenged economy. What this means is that when the InterMarkets are out of sync, Investors need to watch closely for any sudden attempts for them to sync up.

LayLine Asset Management Inc

Harry J. Campbell III, CMT

1/27/26

Interest Rates

Of the three Rates covered (5yr, 10yr, 30yr), so far this year the 5yr and 30yr have diverged from each other.  The 5yr is higher since the beginning of the year and the 30yr is basically flat, with the 10yr slightly higher.  This would indicate that the Rates market is positioning for economic growth (higher 5yr) at the same time comfortable with inflation at these levels.  Inflation is generally associated with growth, unless productivity gains accompany the growth.  In the broadest sense, higher productivity can keep prices from rising even as demand increases, at least that’s the theory.  Its early in the year, but it’s just possible that the Rates market is starting to take into account productivity gains being seen, and yet to develop, from A.I. (Artificial Intelligence) in the economy. 

The FED is meeting today and tomorrow to decide if they should continue to cut the FED Funds Rate or hold.  Most assume they will not cut the rate as inflation is stubbornly above the FED 2% inflation target and the employment numbers are not suggesting any stress on the employment side of the FED dual mandate, price stability and full employment. 

US Dollar Index

The US$ is hitting lows not seen since late 2021.  As reserve currency, a lower US$, all else being equal (and they rarely are) will put upward pressure on the price of international goods and services traded in US$, which encompasses most international trade.  As the US$ weakens it converts to fewer units of a stronger international currency.  To get the same unit of currency from a transaction, the US$ price needs to increase.  For example let’s say a foreign widgets price is $100 and it converts to 100 in local currency.  If the US$ weakens from 100 down to 90, then the widget will only net the foreign producer 90 in the local currency.  To get the same 100 in local currency as before the US$ weakened, the widget producer needs to increase the price to about $110 to net 100 given the weaker US$.  It works the other way, but I will spare you the math.

On another note, tariffs may be affecting the value of the US$.  Given the on again, off again, nature of the US tariffs it shouldn’t be surprising that the US$ would be in less demand (lower value) as countries facing the tariffs look for other means of transacting international business.

Commodities

Commodity prices respond to demand, supply, and the US$.  If demand and supply are in balance (usually not) and the US$ has weakened as much as it has one would expect that commodity prices would be higher, and they are. The GSG was flat for the 4^th quarter of 2025, but since the beginning of the year the GSG has risen quite a bit and getting close to challenging ten year highs for commodities.  Going back to inflation in the Rates section, perhaps this is one reason the FED will not cut the FED Funds Rate tomorrow. 

I don’t think it’s going too far out on limb to suggest that the tariffs the US has imposed on commodities is pushing up prices.  When combined with the upward pressure on commodity prices from the weakening US$, rising commodity prices may dampen some of that growth discussed above.

US Equities

US Equities continue to bounce around with a declining upward bias.  In other words it’s going up, but slower than it was during most of last year.

We are just starting earnings season so on the fundamental side it’s to early for any indication whether fundamental results for the 4^th quarter will hold up to the high expectations of market analysts.

On the Technical side, since November, US Equities has gone down and tested the 50-day MA (moving average of prices) four times only to bounce back up.  That testing by the market indicates that there is some trepidation as to the continued rise in US Equities.  Supporting that trepidation, US Equities did not set a higher low this month to go along with the higher high (new record high) set today. 

What Does This Mean To Investors?

The rising 5yr is hinting at growth. The weakness in the US$ will continue to exert upward pressure on prices for imported goods. Rising commodity prices suggests both growth and higher prices. US Equities seem to be somewhat constrained on the growth prospects, perhaps due to higher costs.  What this means to investors is the InterMarkets are generally supportive of growth, but with higher costs.

LayLine Asset Management Inc

Harry J. Campbell III, CMT

1/13/26

Interest Rates

All three Rates covered (5yr, 10yr, 30yr) have traded flat so far this year, suggesting a degree of status quo in the bond market.  Interestingly, since the FED Funds Rate cut last September all three Rates are slightly higher than when the FED started to cut Rates.  Currently the FED has cut the FED Funds Rate by .75% and yet the 5yr, 10yr, and 30yr are higher than when they started to cut Rates.  Riddle me this, comes to mind.

The most logical translation is the rising 5yr is suggesting economic growth is holding or expanding.  The rising 30yr is suggesting that inflation is holding at elevated levels.  The 10yr agrees with both.  The economic data seems to corroborate this: GDP (gross domestic product) trackers are hinting at over 4% GDP growth as the 5yr has been indicating, and CPI (consumer price index) out this morning shows that inflation is holding at higher than desired levels, as the 30yr has been hinting at.  Sharpening the point a bit, all three Rates are exhibiting an upward bias, with the classic higher highs and higher lows of a trend developing.  The thing about trends, they keep going, until they don’t.

US Dollar Index

The US$ has been on the rise so far this year. It is still in the sideway channel it has been in for some time now, but this is the point where Technicals come into play.  The 50-day MA (moving average of price) has risen up to test the 200-day MA.  Assuming the 50-day MA moves above the 200-day MA and holds, that is referred to as a golden cross, and as the name implies, it’s a positive technical indication suggesting US$ strength going forward.  The thing about moving average crosses is they often tell you what has happened and less about what is coming up. However, as long as the 50-day MA keeps moving higher and is above the 200-day MA, the US$ is nicely bid (more buyers than sellers).

Commodities

Like the US$, the GSG has been on the rise since the beginning of the year putting commodities at the highest level since mid 2022.  It’s also been accompanied by a series of higher highs and lows. Long story short, there is a solid upward trend in commodity prices and it looks to be supported by the weaker US$ (InterMarket relationship is inverse, one goes up the other goes down).  On the Technical side, the 50-day MA is above, and has been above the 200-day MA since last July, acknowledgement of the strength in the upward trend. The combination of the two provides an indication of the strength of the trend.

US Equities

US Equities hit a new all time high yesterday with both the Technicals and Fundamentals supportive of the move. 

On the Fundamental side, the earnings season for the 4^th quarter started today with many projecting some fairly significant total earnings growth for 2025 and projecting similar increases for 2026.  Some might say that the market needs significant earnings growth to support the current, historically elevated trailing P/E (Price/Earnings) ratio for US Equites of ~25, with the long term historical P/E around 20.  While a P/E of 25 may be considered uncomfortably elevated, if earnings can grow at the lofty estimates being tossed around for 2026, a forward looking P/E ratio of 25 might not be that out of touch.

On the Technical front, the 50-day MA and the 200-day MA are positioned where they have been for some time, the 50-day MA is well above the 200-day MA and both are trending upward, a strong formation.  If we want to be picky, the slope of the 50-day MA is not as steep as it was last fall, but higher highs and higher lows since mid-November are adequately supporting the current upward trend.

I’m going to leave you with an old Wall Street saw, “As goes January, so goes the rest of the year”.  As with a myth, there is usually a grain of truth buried within and something to be learned.

What Does This Mean To Investors?

To summarize; Rates are trending higher (bond prices lower), the US$ is showing some Technical strength (good for consumers of foreign produced goods and service), Commodities prices are trending upward (shows growth as long as supplies are not constrained), and US Equities are both Technically and Fundamentally supported. What this means to investors is to watch for any deviations from these InterMarket trends that have, and are likely to continue to develop.

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

Copyrighted 2026, LayLine Asset Management Inc