Over the last two weeks there has been a downgrade in global economic expectations, some adverse currency market action for commodities, and a continued rise in geopolitical anxiety.
US markets received a barrage of key economic data points last week that pointed to an improving US growth trajectory.
The markets are facing a repeat of “irrational exuberance.”
The US recovery looks destined to sneak up on the markets, particularly with the Treasury market.
The question of valuations was apparently answered recently, as stock prices fell sharply despite a very favorable psychological kick-off to the US earnings cycle.
The track of the US economy is important, but seeing a trend of better economic news from China is probably more important to physical commodity markets.
The Fed managed to extend the pattern of new highs in global equities by maintaining its old stance and simply reiterating the prospect for rates to remain at low levels for an extended period of time.
It would seem like US and global equity markets have finally come to grips with the less than anticipated rate of recovery, the fear of overvaluations and a rising measure of uncertainty toward the Middle East and oil prices.
Macroeconomic recovery prospects were improved by the actions of the ECB last week, even if the action was months and perhaps years late in coming.
Another month has drawn to a close, and US economic data has continued to be mixed and largely disappointing to the trade.