NEW YORK (TheStreet) -- Tuesday's economic data backed the Federal Reserve's announcement last week that it may slow bond purchases if the economy strengthens as durable goods orders and existing home sales outperformed expectations. Alongside support from the People's Bank of China, global markets rebounded and riskier assets found buyers.The first chart below is of SPDR S&P MidCap 400 ( MDY) over iShares S&P Index ( OEF), which measures strength of mid-cap stocks relative to large caps in the S&P 500. As smaller-cap stocks outperform larger ones, represented by upward price movement in the chart below, investor sentiment tends to be strong. Since mid-May, this pair has trended lower, signaling that investors were favoring large-cap stocks and positioning portfolios defensively. The Fed's announcement last week brought this pair down to yearly lows. As markets have stabilized, realizing that dire predictions of market weakness may be overstated, the price action has rebounded higher.
Equity markets across the world fell, but U.S. equities showed strength versus German equities, and European developed economies as a whole. Due to a relatively better economic outlook for the U.S. for the rest of this year, expect U.S. assets to outperform Europe's.
The last chart is of PowerShares DB US Dollar Index Bullish ( UUP) over CurrencyShares Japanese Yen Trust ( FXY). The yen is a safe-haven currency that attracts buyers in times of global economic uncertainty. The Bank of Japan has aggressively weakened the yen for the better part of this year, but uncertainty over the future of U.S. stimulus brought strength back to the yen. That rattled all asset markets and weighed on commodities priced in U.S. dollars. At the time of publication the author had no position in any of the stocks mentioned. Follow @AndrewSachais This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.