In the past week, investors’ concerns about the volatility created by retail investors have dissipated as markets moved into a risk-on stance. Oil prices, which have positive exposure to the macro cycle and inflation and negative exposure to liquidity, led the way, rising 6.3% in the week. Brent crude is now at its highest level since February last year, at the beginning of the pandemic. Meanwhile the price of gold, which tends to have positive exposure to liquidity and inflation and negative exposure to the economic cycle, fell during in the week. These two movements, alongside the rise in equities, suggest that the key driver of markets last week was positive investor sentiment about the economic recovery.
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