Market News Today – USD at 3-year lows, Equities recover over 1%, (Dow over 32K) Yields cool again but remain relatively elevated (10yr – 1.41%). RISK ON. JPY & CHF heavy. Commodity currencies & Sterling hold bid, EUR breaks January resistance. Copper at 10-year high, Oil at 13-mth high, Gold under $1800. BTC at 50K. Sentiment lifted as J&J announce a single shot vaccine and independent study shows Pfizer vaccine 94% effective. Overnight – Nikkei up 1.67%, German Gfk confidence ticks higher, Gamestock rallied over 100% and then another 75+% after hours!
Reflation trades are back in full swing with bonds selling off and stocks rallying, with the combination of fiscal stimulus and ongoing monetary support fulling the moves. US 10-year rates have dropped back from session highs, but are still up 3.2 bp at 1.41%. Japan’s 10-year has gained 2.1 bp to 0.125% and longer dated benchmarks have now broken multi-annual highs. Australia and New Zealand bonds underperformed and Australia’s 10-year rate lifted nearly 12 bp, despite the fact that the RBA bought bonds for the second time this week. Fed Chair Powell tried to dampen inflation concerns and Vice Chair Clarida said he expects current bond purchases to be maintained at the current pace for the rest of the year. That will likely continue to underpin risky assets and in some quarters add to concerns that easy money is fuelling bubbles in equities and elsewhere.
Today – US Durable Goods, GDP, Weekly Claims & PCE Prices. ECB’s Lane, de Guindos, de Cos, Fed’s Bostic, Bullard, Quarles, Williams, and Earnings from over 400 companies in US & Europe.
Biggest (FX) Mover @ (07:30 GMT) AUDJPY (+0.36%) Continued yesterday’s momentum rallying from 83.20 and holding over break of 20MA testing over R2 (84.50) to 84.65, R3 85.00. Faster MAs aligned and trending higher, RSI 77 and rising, MACD histogram & signal line aligned higher but flattening after big break of 0 line yesterday. Stochs down from OB zone but rising again. H1 ATR 0.1325, Daily ATR 0.6000.
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Stuart Cowell
Head Market Analyst
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