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The U.S economy is still in growth mode, with a current YoY GDP of 5.5%, while  inflation rose towards 7.9% boosted by the pandemic stimulus (ultra-light monetary policy), supply-chain issues and the Ukraine crisis, with higher energy prices as the core dilemma, along with surging prices in the housing sector. Interest rates might be hiked about 50bps in May, which supports the dollar in value as does the recent hike to fight inflation. The 10Y Government yield keeps rising and boosts the dollar even higher.

The output gap is still below zero while it's heading higher with minus 91.96. Potential tightening in monetary policy might be able to change and reverse the macro view of the rising economy. This would fight the inflation rate with interest rates hikes and strengthening the dollar. Possible increases in production or solving the supply-chain and semiconductor issues may be helping to decrease the rising prices as well. There is still room for the business cycle to rotate higher while it seemingly peaks.

The dollar index has increased its value against the major currencies since about 11 months ago, and is testing a potential technical selling level which could serve surprises in the fundamental or news aspect, for instance, unchanged interest rates or keeping the stimulus ongoing. However, with the current plan it might be boosted to even higher rate levels.

Gold has increased its value over the past months by way of safer-asset buyers with the unfolding geopolitical situation. However, the market found sellers in combination with long liquidations around the monthly upper balance of its median-term balanced price range and closed the month with a selling tail. Traders could speculate about rotations to the lows again – following and pressured by the higher dollar and yield.

Crude oil rose several months by the global production cuts while the U.S considers releasing more of its oil reserves to pressure the oil price lower. The market found some selling around the swing highs back from more than a decade ago and closed with a selling tail. Peace between Ukraine and Russia could of course also remove some of the price pressure.

Looking at the equity sector we can identify the current monthly bracket as the market rotates towards the upper balance extreme where the market might find sellers due to the aforementioned higher dollar, yield and increases in the interest rate. Market participants still may simply lean on the mentioned balance extremes – giving the market a rotational outlook, depending on the news stream.