By Global Macro Monitor
Almost everything that happened last week is irrelevant given what looks like a U.S. debt deal. What we’re watching is how the relief rally holds and whether the Friday’s poor GDP data was a game changer. Looking under the surface of the price action last week, it appears the market is starting to fret over the coming fiscal contraction into a soft economy. Note, the Russell was hammered the hardest, bonds rallied, and most commodities were lower.
Another area of focus will be the European Debt crisis. The CAC was hit the hardest of the non-U.S. equity indices as French banks are perceived to hold the most sovereign exposure to the periphery. It will be interesting to see if gold can bounce from the knee jerk sell-off over the debt deal. Also watching the 1-month T-Bill yield to see if it comes back in. Good luck.
