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

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.

LayLine Asset Management Inc

Harry J. Campbell III, CMT

12/9/25

Interest Rates

So far this month all three Rates covered (5yr, 10yr, 30yr) have been on the rise.  While still lower than the highs of the year, it is interesting (to bond geeks) that the market assumes that the FED will lower the FED Funds Rate tomorrow at their meeting and yet Rates are rising.  Simple translation, the bond market is not comfortable with the FED continuing to lower Rates.  Or, to put it another way, inflation is a concern for the bond market.

As we approach the end of a very interesting year it’s worth looking back at the movement of Rates over the year.  The 30yr is basically flat on the year at 4.81%, with a low of 4.34% and a high of 5.15%.  The 10yr is lower on the year having entered the year at 4.57%, it’s now hovering around 4.18%, with a low of 3.89% and a high of 4.81%.  The 5yr is lower on the year having entered the year around 4.38%, it’s now around 3.78%, with a low of 3.53% and a high of 4.62%. 

Of particular note is the three Rates covered here at the beginning of the year had a fairly narrow spread (4.81%, 4.57%, 4.38%) and now the spreads have widen out (4.81%, 4.18%, 3.78%.)  This exemplifies what has been communicated here all year, the bond market is concerned about inflation (flat 30yr) and its sticky consistency, at the same time the bond market is concerned about the strength, or lack thereof, in the economy (lower 5yr).  I mentioned the FED is highly likely to lower the FED Funds Rate tomorrow, indicating they are more concerned about economic weakness then inflation. My inclination is the bond market does not support this position, rather its more concerned that inflation is still well above the FED inflation target of 2%.  This has major implication for the economy b/c while funding the US debt is being primarily accomplished with short duration bonds that are affected by the FED Funds Rate and benefit from lower Rates, the economy, corporate bonds, loans and mortgage Rates, are tied to longer duration Rates that are staying on the high side.  So while the Federal government gets lower funding Rates, the economy is stuck with higher Rates, hence the higher inflation and slower economy scenario.  

US Dollar Index

The US$ is down about 10% from its high in early January. The reason for this weakness lacks a bit of certainty.  Some say that lower short term interest rates have reduced the value of the US$, as interest Rates directly affect the value of the US$.  The problem with that thought process is twofold.  First, the FED started to lower Rates in the fall of 2024 and the US$ rose in value for the rest of the year, and second, this year the FED did not start to lower Rates until September and the US$ was already down near its low.  

Others were questioning how the US$ would react, value wise, to tariffs being imposed by the incoming administration.  With the benefit of hindsight, the question has been answered, the US$ weakened by about 10% and it appears to be directly linked to the tariffs.  In January, as the idea of significant tariffs started to sink in, the US$ started to decline in value reaching this cycle low in early July as tariffs were imposed.    

I’m more inclined to focus on the tariffs line of thought.  Tariffs and the US$ are joined at the hip, so to speak.  The US$ is used in most international transaction and tariffs were going to be placed on most international product transactions with the US.  A weaker US$ suggests that the tariffs have reduced trade volumes with the US and therefore there is less need for US$ to finance fewer transaction.  Lower demand, lower price. 

Commodities

Commodities, directly affected by tariffs, fell rather precipitously from January into the tariff announcement in April.  What’s noteworthy is the US$ also dropped during that time. The InterMarket relationship we expect is that a weaker US$ pushes up commodity prices.   However, it appears that once the tariffs were officially put into place, commodity producers were fairly quick to increase prices to account for both the cost increase imposed by tariffs and the weaker US$.  Commodities have been rising ever since, now hovering around multi-year highs.  This may provide some explanation for the sticky inflation mentioned above.

US Equities

US Equities have adopted a sideways trend since early October even though both the Technical and Fundamental picture remains rather positive.  The only slightly negative on the Technical front is US Equities have not put in a new high after two attempts, and, US Equities did put in a lower low a couple of weeks back.  Other than that, the Technicals remain strong.  The only slight negative in the Fundamentals is that estimated 4^th quarter earnings are expected to be the weakest in almost two years, but not that bad, and total earnings growth for the year is still expected to grow at a healthy clip.  Revenue growth also appears to be coming in strong for 2025.

However, the sideways price action of US Equities is something to consider.  While there are plenty of theoretical reasons why US Equities would be trending sideways, it suggests the market has concerns about the growth prospects for the economy.  Whether these concerns come to fruition is a matter for the market to contend with and perhaps the Rate decision tomorrow by the FED, and their commentary regarding future Rate cuts, will help the market decide whether its concerns are a concern.

What Does This Mean To Investors?

This is always an interesting time of the year, with plenty of investment positioning happening in all the InterMarkets.  Important questions include; will Rates on the long end rise, hindering the economy, even as the FED cuts short-term Rates, will the US$ strengthen or weaken as tariffs continue to affect global trade with the US, will commodities continue to rise putting upward pressure on inflation, and will US Equities come to a consensus on the direction for growth?  What this means for investors is with so many questions with no clear answers, making big bets will be difficult, but plenty of opportunity to adjust the mix of positions.

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.

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