Stocks and precious metal ETFs were hurt by a rising dollar on Monday. PowerShares DB US Dollar Index Bullish (NYSEArca: UUP) added 1%.
Last week, the European Central Bank cut its key interest rate and announced liquidity measures designed to help banks.
“The reality is that the European debt crisis will only be over when private investors are happy to buy the bonds of any Euro Zone nation at a reasonable interest rate and European economies are growing again,” said David Kelly, chief market strategist at JP Morgan Funds.
“To get this point, European nations will need to commit to achieving fiscal balance in the long-run, achieving economic growth in the short run, provide a pan-European guarantee that all buyers of sovereign debt will be paid in full and on time, and charge the ECB with intervening massively in debt markets in the short-run to hold yields to reasonable levels,” he added in a weekly outlook. “Despite an initially positive market reaction, we are no closer to this end goal than we were a week ago, and European markets could have a tough time this week as this reality sinks in.”
Full disclosure: Tom Lydon’s clients own GLD and SLV.