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Is The Real Pivot on the USD?

BentinPartner Weekly

The combination of the lowest US CPI print since January (7.7% yoy vs. 7.9% expected and 8.2% in September), the absence of a sweep victory from Republicans, a defensive investors’ posture, the return of share buybacks and a massive influx from CTA’s as key technical levels were broken all led to a massive rally in risk assets last week.

Expectations of a reduced pace of Fed monetary tightening (not yet a pivot) and expectations of a fiscal policy more constrained by the divide between Congress and the White House also fuelled a sharp bond yield decline which enabled so called growth stocks to charge on the upside as well.

Talks that China could ease off its covid restrictions also led to another impressive rally in commodities and to a revival in Chinese shares that have been lagging all year.

The “risk on” mood was so strong that the biggest meltdown in crypto history (the bankruptcy of FTX) was barely noticeable on any chart other than in the crypto sphere itself.

This was an environment ripe for the dollar to retreat and precious metals to rally as well, leading the dollar into a 4% drop in two days and charts pointing at a possible further decline. Reversals are never easy and clear but the return of dollar weakness could be the real pivot as well.


Click on the Picture below for our latest Leaders & Laggards Report:

Over the past week, the S&P500 rallied 5,9% (-16,1% YTD, Z-score 2,2) while the Nasdaq100 rallied 8,8% (-27,6% YTD, Z-score 2,0). The US small cap index rallied 4,6% (-16,0% YTD). AAPL rallied 8,2% (-15,7%).

Cboe Volatility Index sold off by -8,3% (30,8% YTD) to 22,52.

The Eurostoxx50 rallied 4,9% (-7,6%, Z-score 2,1), underperforming the S&P500 by-1%.

Diversified EM equities (VWO) rallied 3,8% (-21,3%, Z-score 2,5), outperforming the S&P500 by -2,1%.

The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies sold off by -4,0% (11,8%, Z-score -2,8) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) rallied 2,4% (-6,2%).

10Y US Treasuries rallied -35bps (230bps, Z-score -2,1) to 3,81%. 10Y Bunds dropped -14bps (234bps) to 2,16%. 10Y Italian BTPs rallied -26bps (303bps) to 4,21%, underperforming Bunds by 5bps.

US High Yield (HY) Average Spread over Treasuries climbed 5bps (185bps) to 4,68%. US Investment Grade Average OAS dropped -9bps (58bps) to 1,58%.

In European credit markets, EUR 5Y Senior Financial Spread dropped -13bps (52bps) to 1,07%.

Gold rallied 5,3% (-3,2%, Z-score 2,6) while Silver rallied 4,1% (-6,9%). Major Gold Mines (GDX) rallied 13,4% (-11,6%, Z-score 2,3).

Goldman Sachs Commodity Index sold off by -2,2% (32,0%). WTI Crude sold off by -3,9% (18,3%).

Overnight in Asia,,,

  • S&P500 -17 points; Nikkei -1%; CSI300 +0.2%; Hang Seng +1.5%

  • China issued sweeping 16 points directive to rescue its property sector, adding to a major recalibration of its pandemic response and leading Chinese developer stocks and bonds to soar this morning.

  • Treasury yields rose and the dollar strengthened against most of its major peers after Federal Reserve Governor C. Waller pushed back on bets the US central bank was nearing the end of its hiking cycle.

  • Fed Vice Chair Lael Brainard will speak today and US PPI is due on Tuesday.

Have a nice week ahead!

Marc Bentin, BentinPartner GmbH

Chief Investment Officer


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Marc Bentin serves as Economic Advisor to Blue Lotus Management,

a specialist multi-manager investment firm, which seeks to provide investors a compelling alternative to the traditional 60/40 equity and bond portfolio by targeting higher returns without amplifying equity risks.

BentinPartner GmbH is Advisor to the Phi Funds AIF, an umbrella Alternative Investment Fund registered and regulated in Lichtenstein, specializing in the management of Funds focused on physical precious metals.


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