Dollar, rates and liquidity: the conditions behind the markets.
Macro conditions are mixed: the dollar and liquidity on the supportive side, yields on the restrictive side. The dollar is still below its 20 week trend. Money has not got cheaper. Liquidity keeps expanding.
The dollar closed at 118.90 against a 119.72 trend, 0.69% below, with a momentum reading of 44. The US 10 year at 4.68% holds above its own 4.51% trend. M2 is up 5.5% over the year and added roughly $100bn on the month.
Three forces set the weather behind every market: what the dollar is doing, what money costs, and how much of it is moving. No single week decides anything. The direction is what matters.
The broad dollar index at 119 sits below its 20-week EMA (120) with RSI 44 — a softening dollar supports risk assets.
The broad dollar index tracks the US dollar against major currencies. A softer dollar tends to loosen global financial conditions; a firm one keeps them tight.
The US 10-year yield at 4.68% holds above its 20-week trend (4.51%) — yields have not eased yet.
The US 10-year Treasury yield is the anchor price of money. Easing yields lower the bar for other assets; firm yields raise it.
US M2 money supply is growing 5.5% year-over-year and rose month-over-month — the liquidity backdrop is expanding.
M2 measures the broad money supply. Expanding liquidity is a supportive backdrop; contraction withdraws it.
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