Contributor: Edward Meir

Investor focus last week remained on the ongoing correlation between US treasury yields and oil prices, especially now that 10-year rates have reached fresh highs.

Despite the recent attacks in the Gulf, we were surprised to see Saudi shipments have increased substantially. In fact, Saudi oil flows are running at their highest levels since the war began.

What's playing into the economy this week

After a mostly negative reaction to Federal Reserve Chair Kevin Warsh’s press conference Wednesday following the Fed policy statement, Thursday brought us a surprise upside reversal in most markets.

US diesel prices hit a record $6 per gallon last week. That will have a forceful impact on American pocketbooks, just like higher gasoline prices are having.

We had another choppy week in the various markets leading to the Labor Day holidays.

Despite our concern that last weekend's doomed US-Canada trade talks would unsettle sentiment, most markets shrugged off the impasse and instead held up fairly well.

The breakdown in the US-Canada talks underscores one of the least talked about problems with tariffs. Imposing them is relatively easy (provided they are not overturned by the courts). But when it comes to removing them? A number of industries have grown accustomed to the protection tariffs afford. They will fight tooth and nail to keep them in place. Politicians usually buckle under this backlash, and we suspect this is what happened here.

We generally saw less hectic conditions in the various markets this past week as the lack of significant geopolitical or macro headlines kept volatility somewhat at bay.

Outside of crude, most other commodity markets finished higher. In the base metals group, copper, zinc, and aluminum each added between 2% to 3%.