Weekly Market Commentary 05/18/2018

In a fitting tribute following the untimely demise of Lois Lane (Margot Kidder), several asset classes took to the skies this week; most notably it was up, up and away for bond yields, oil prices and the dollar. The first two climbed to multi-year highs, while the greenback rebounded to the highest level since last November. All of the movements have a common denominator: a strengthening economy that increasingly looks set to morph into the longest expansion in U.S. history. To be sure, beyond that main catalyst, there are nuances that uniquely underpin each of the upward moves. Increased inflation expectations are spurring bond yields upwards, higher rates, in turn, are attracting capital flows into dollar-denominated assets, and dwindling oil inventories against rising demand is sending crude quotes to over $70 a barrel, a four-year high.