US equity markets are opening lower in terms of the latest earnings. We saw Walmart report with the retail bellwether posting slight beats on EPs and revenue. Due to strong holiday shopping. But at the same time, the company posted a cautious. Outlook for the fiscal year. Now stocks ended yesterday higher as tech rebounded and AI. Over valuation fears eased through the first two days of this holiday shortened week. As for the ten year yield, we saw rise after retreating last week. And in New York morning trade. Gold is currently hovering right below the 5000 level after regaining that key technical level yesterday. While joining me this morning is Katy Kaminski, Chief Research Strategist at AlphaSimplex.
Katy good morning. Thank you so much for joining us. Well we are looking at the equity markets this morning following the latest fed minutes. But also given some of the concerns about AI disruption. So where do U.S. equities stand and what are we seeing overseas?
So this is a good question because yesterday was clearly a positive day for equity markets. But today it seems that the market is a little bit more concerned about the role of monetary policy given the fed minutes yesterday. You are also seeing some concerns over geopolitical risks based on sort of dialog related to Iran.
So it seems that there's a little jitters, but it's not necessarily just an AI story. Today it seems much more macro oriented. But the US versus abroad, what has been interesting is that there's substantial dispersion. If you look at Korea, it's up over 35%. And you're seeing this dispersion where things in AI are really outperforming.
And you're also seeing just sort of big differences across the globe in terms of winners and losers. So I think that does make people nervous as well.
Yeah, we continue to watch that outperformance of the global equity indexes in addition to the performance here stateside. But I do want to get your take on bonds now. Global bond yields retreated last week but are higher the past few days. So what are you looking for when it comes to the fixed income market.
Especially if we take rate differentials and fed rate expectations into consideration here. So this is a good question, because the general theme over the last few days has been very positive for bonds until yesterday. So what that means is that the markets have in some sense been anticipating that, you know, things were looking up for bonds and that we'd eventually have cuts.
But I think the fed minutes yesterday really in some sense put that into question with a slightly hawkish tilt in their discussion. And what is interesting about this is it just kind of has caused yields to rise. So people thinking, you know, we may not get the type of cuts that we want and fixed them income that we want.
And then they also commented a little bit about still being concerned about inflation longer term. And that has caused yields to rise as well. So I would note that today stocks and bonds are both down. And that is a sort of an interesting point that it's probably more of a question of monetary policy and concerns over that.
That's causing that sort of positive correlation today.
Yeah. And Katy, now that we've covered equities as well as bonds, let's take a look at the FX market. So this morning we are looking at the US dollar index hovering right around the 98 level. But we know that dollar weakness has been a topic that all of us are keeping our eyes on. So what do you make of the US currency right now and what is your outlook?
So this is a good question because signals for the dollar have been very strong to a weaker dollar over quite some time. But there has been some recent moves and some recent themes that have given a pause and reversed the dollar trend. I mean, if I highlight a couple of these, one, of course, is this potential pullback in monetary policy that is very pro dollar.
Um, there's also a flow story when equities are down that's also pro dollar. But it just seems that that trend um went pretty far and maybe is consolidating. And we'll have to see if we'll continue to see the pressure on the dollar, uh, in the future, despite how far it's already come in the last few months.
Yeah. And, Katy, it only makes sense to move on to commodities, given that gold and silver prices have been rallying in 2026, and there's been that correlation with the US currency. So what do you make of the rally we've seen this year in the precious metals trade. And do you see this continuing. So this is a really good question because we have seen such a long rally in precious and base metals.
Um, we have seen a lot of consolidation In signals that suggest that this trend, although it seems to be continuing, is deteriorating some. I mean, if you just look at a price chart, you can see there was a clear trend, but the volatility is high. So I think it's it's definitely a period where we might not see as much movement in the future, just given how much movement we've already seen.
I think energies on the other hand, are kind of interesting. They've been range bound. But anytime there's geopolitical news like what we've seen today and yesterday, you do see big moves in the energy markets. So we've seen a big rally recently. So commodities remain interesting. But they are volatile as of recently.
Yeah. And you just mentioned oil Katy. And this morning we're looking at both WTI futures and Brant futures higher with Brant above that $70 a barrel level. And you also mentioned the gains we're seeing in the energy sector. And not surprisingly when we look at the S&P 500 index itself it is only eking out a gain of about half a percent year to date.
But we're looking at the energy sector advancing about 22% year to date. So that tells you a lot. But what do you make of what we're seeing in oil prices. And do you expect a pullback. So this is a good question because you definitely have seen a sizable trend in energies this year. Energies have been very rage ground prior to that over the last year or two, especially over the last 2 to 3 years.
Um, it does feel like there is a potential for a continued breakout in energies if we have continued escalation in geopolitical risk. Um, if again, you know, sort of the last recent news is just a blip and we kind of go back to the status quo, I you could anticipate some sort of recalibration or reversal in energy prices back towards that range.
Uh, right now, we're still definitely in a breakout period for energies to the upside.
And finally, Katy, before I let you go, since we're just coming off the fed meeting minutes from January. What is your outlook for the central bank? As we head into the rest of 2026?
So this is a good question. I think the general consensus is that we will have up to two cuts over the next few months. But it is very muted. And we started to see some disagreement and also some tilt towards both directions, including some hawkish statements yesterday. This further makes outlook in terms of trying to predict fixed income more challenging.
And we've seen our signals in terms of how to trade fixed income, uh, be much more muted. So I think we really need some sort of catalyst or more information to be able to understand where the fed will go this year at this point. Well, Katie, we will have to leave it there for today. But thank you so much for joining us this morning, and thank you so much for sharing all of your insights.
