Global Macro: Important Data on Tap This Week

NEW YORK (TheStreet) -- This week marks an important turning point for the U.S. economy and financial markets. Earnings remain in full swing, and due to mixed results, investors have been wary to push equities above all-time highs.

On the economics front, data from the Federal Reserve and labor market take the spotlight. There were reports last week that the Fed is leaning toward a more dovish stance than had been expected. That pushed the U.S. dollar lower and assets responded as if the end of quantitative easing would be delayed.

The Fed convenes this week, and if the reports prove true and monetary policy remains accommodative, risky assets will get bid higher.

Nonfarm payrolls will be released on Friday. That will be a good indicator of whether the economy is truly improving. If the number comes in at an extreme on either end of the spectrum, markets will adjust their rates hike horizon.

The first chart below is of Guggenheim S&P 500 Equal Weight ( RSP) over SPDR S&P 500 ( SPY). This pair measures market breadth, or the amount of participation in equity index moves. If the pair goes up, then a majority of the stocks in the index are following suit.

This pair has recently spiraled lower off yearly highs and begun a trend lower. That is a bearish signal that will either be confirmed or adjusted after this week's events. Expectations for higher rates will surely push the pair further into a downward trend.

The next chart is of iShares Barclays 1-3 Year Treasury Bond ( SHY)over iShares Barclays 20+ Year Treasury Bond ( TLT). This pair measures the Treasury yield curve. As the pair moves higher, long-term rates move up faster than short-term rates, thus steepening the curve.

The chart shows that the yield curve has continued higher since the beginning of May. Markets are pricing in an end to accommodative policy; the only question that lies ahead is how quickly.

The uptrend seems to be weakening, and if the Fed presents a dovish tone this week, then the strong rise will surely correct lower.

The last chart is of PowerShares DB Commodity Index Tracking ( DBC) over CurrencyShares Swiss Franc Trust ( FXF). This measures a basket of commodities in a currency other than the U.S. dollar to determine true strength. The franc is a fairly stable currency, and provides a good base asset to measure commodities against.

Commodities have been feeling the effects of weaker global demand and a higher rates environment recently.

Price action has fallen from its point of consolidation in early July and is quickly closing in on yearly lows.

Economic strength and improving gross-domestic-product expectations should give this pair a boost. Otherwise, rising rates will further diminish the value of this commodities basket.

At the time of publication the author had no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Andrew Sachais' focus is on analyzing markets with global macro-based strategies. Sachais is a chief investment strategist and portfolio manager at the start-up fund, Satch Kapital Investments. The fund uses ETF's traded on the U.S. stock market to gain exposure to both domestic and foreign assets. His strategy takes into consideration global equity, commodity, currency and debt markets. Sachais is a graduate of Georgetown University, where he earned a degree in Economics.

More from Opinion

These 5 Tech Giants Still Aren't That Expensive

These 5 Tech Giants Still Aren't That Expensive

Intel CEO Brian Krzanich's Ouster Proves CEOs Aren't Above the Rules

Intel CEO Brian Krzanich's Ouster Proves CEOs Aren't Above the Rules

Red Hat CFO Tells TheStreet: Tech Trends Are Still in Our Favor

Red Hat CFO Tells TheStreet: Tech Trends Are Still in Our Favor

Throwback Thursday: Intel Edition

Throwback Thursday: Intel Edition

Intel's Next CEO Should Try Harder to Protect Its Flanks Against AMD and Others

Intel's Next CEO Should Try Harder to Protect Its Flanks Against AMD and Others