Sentiment among risk assets has steadily improved over the short term, driven by traders' expectations of a less aggressive U.S Federal Reserve in light of it's interest rate path i.e. 100bps vs the 75bps that was delivered. Even on the back of this increase, Fed Chair Jerome Powell acknowledged the 'unusually large' increase which has prompted traders to believe that the rate at which monetary policy is due to change over the coming years will be at a slower pace than initially anticipated. With the bond market already having discounted both a drop in inflation (see the lower prices of commodities) by printing lower yields, as well as well the U.S Dollar unwinding from a 'near overbought' level, risk assets have made a short term recovery from medium term 'near oversold' levels. This has also been driven, in part, by fairly sizeable short positioning among larger traders and investors that has helped to drive the recovery off the lows. On the local market, index has continued to slowly grind higher, albeit at a less aggressive pace, as observed by the indecisive candle structure (a mixture of small bodies and long upper wicks within the short term upward trend). The trend of a lower NPN and PRX, which has been unwinding from overbought levels, has seen funds flow into a broader selection of names, including an extremely oversold Resources sector. Last week I discussed AGL trading around it's 2.5 to 3x it's mean over 200 days. Over the week, the share was higher by 10% with half of those gains coming on Friday with the group having reported it's results the prior day. On a relative basis, we also saw Resources outperform Financials by around 9% off the recent low while money flowed out of PIK back into SHP. Most recent SHP hit my short target of 19300c before rebounding to +22700c late last week. Following the massive NPN/PEX rally over Q2 we could see these name continue to unwind or at best trade in a consolidation phase over the short term. Weighing on these counters may also be the news that Tencent peer Alibaba has been added to an SEC list of Chinese firms facing delisting. This week, the factor in focus will be the July non-farm payrolls data (Friday) while speeches by several FED officials will be closely watched for any clue on the path for monetary policy. In addition ISM manufacturing and non-manufacturing PMI data should shed light on global economic conditions while policy decisions out of the UK and Australia is due. We will also see earnings season continuing to guide investor decisions with the focus being on management commentary regarding guidance.