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Global markets are picking up the rally where the US left off yesterday.  Some of that positive tone is following through to US markets this morning, but equity futures are only modestly higher.  Small business sentiment was modestly weaker than expected, and as discussed in this morning’s report, has confirmed the message from a number of other indicators that the labor market is moderating.  Bond yields are lower relative to Friday’s close, but they have erased just about half of their initial declines.

In last week’s Bespoke Report, we highlighted the fact that through last Thursday, while most equity indices and other assets were all in steady downtrends over the last few weeks, the dollar was moving in the other direction and steadily rallying.  Two trading days later (or one and a half if you consider the fact that Monday was a holiday for some), we’ve started to see a reversal of that trend as assets have been rallying and the dollar’s rally has taken a breather.  The dollar’s weakness yesterday was even more notable given the geo-political tensions in the Middle East given the dollar’s typical safe-haven status.   It’s only been two days, but as the saying goes, once is random, twice is a coincidence, but three times is a trend.

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