The Market Week – March Week 1
The focus of attention once again this week is on the Bond markets, however Treasury prices & yields have stabilized, and volatility has cooled. The pressure on the USD eased as commodity currencies came off 3-year highs and equity markets recovered.
Unemployment remains stubbornly high globally, and NFP is in focus for Friday with expectations of a 180,000 headline. Last week’s new US unemployment claims beat expectations significantly at 730,000. This week they are expected to tick higher again to 758,000.
The vaccine rollouts continue to gain traction globally – all US citizens will be offered the jab by May 31 – as the signs of the pandemic easing continue, and the WHO reported a fall in cases for a seventh consecutive week. However, the positive vaccine news is tempered by increases in the new variants.
This week FX volatility picked up – the USDIndex tested 90.00, then rallied over 91.20 to start the month before settling around 90.70. EURUSD moved to highs at 1.2240, then down to under 1.2000 before testing 1.2100 once again. USDJPY held over 106.00 and even tested 107.00 and 6-month highs. For Cable, after a spike over 1.4200 and lows under 1.3900, the psychological 1.4000 remains key.
Global stock markets cooled from all-time highs. The USA500 remained below 3900 and under the 20-day moving average, and even tested below the 50-day moving average at 3825 as worry about valuations and a rise in inflation increased.
Q4 Earnings Season continues to beat to the upside, with over 90% of USA500 companies having reported, 80% of whom reported better than expected results.
The Gold price fell again this week having shown some life last week. The collapse from $1800 pushed to $1707 and 9-month lows as the non-yielding asset continued to be pressured lower. Bitcoin had another volatile week but found support at $45,000 and has since recouped to $50,000.
USOil prices peaked at $63.80, before testing under $60.00 as the cold snap in the southern US disappeared and expectations of more dovishness from the OPEC+ meeting this week cooled.
The yield on the US 10-Year Treasury Note holds over the key psychological 1.000 level and tested 1.6100 this week to post a new 12-month high. The anticipation of the large US stimulus package, record high stock markets, and the spectre of rising inflation are combining to keep yields the main focus of markets.
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Stuart Cowell
Head Market Analyst
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