Coffee, cotton and silver rally as the equity market bounce continues and the u.s. dollar remains under pressure.
Commentary:
Markets are leaning decisively toward commodities, with Coffee extending its rally by 4% today, following a 3.91% gain yesterday. This two-day surge signals bullish positioning, likely driven by tightening supply expectations. Meanwhile, Gold posted a sharp 3.66% decline yesterday, trading with elevated volume and a wide range. buyers stepped back in today and bought the yellow metal. It does look like some traders took profits from precious metals and rotated capital into select agricultural commodities. But they cannot get enough of that yellow stuff.
Alongside Coffee, Cotton rose 2.58% and Silver rallied 1.95% in Wednesday session, reflecting broader strength in the softs and metals complex. Equity markets also carried their momentum forward. The NASDAQ 100, S&P E-mini, and Dow Jones all gained yesterday and continued to show strength today. The NASDAQ rose 2.28% yesterday, and the Stipelis Equity Index added another 1.46% today after a 1.5% gain yesterday. While this looks like a continuation of a bear market rally in equities, today’s follow-through is encouraging enough to put the desk on alert for a potential shift in tone.
On the downside, energy markets remain under pressure. Crude Oil’s 2% drop yesterday, followed by a 3% decline in Natural Gas today, points to near-term bearish sentiment across the sector.
FX markets are also active. The Australian Dollar is up 8% over the past two weeks, reinforcing the desk’s constructive outlook on commodities… The Australian Dollar is sometimes referred to as the “Commodity Currency” due to its relationship with Gold, Iron Ore, Coal and Natural Gas. Meanwhile, the US Dollar slipped another 0.5% today, suggesting that the correction in the Greenback is not over.
Overall, commodities remain tightly linked to rate expectations—still moving in the same direction. That dynamic could spell continued headwinds for equities. The tape is sending a clear message: momentum is building in cyclical commodities, hinting at ongoing weakness in bonds and the US Dollar.
from the trading desk of stipelis 4-24-2025