The Market Week – January Week 3
- The Biden/Harris team take the reins in the White House as President Trump leaves office. Janet Yellen likely to be the first female Treasury Secretary, has suggested much more stimulus is to come and there is a need to “act big” and worry about national debt later.
- A key week for Central Banks this week too – meetings from the BoC, BoJ and ECB top the headlines; with no changes in interest rates for some time to come the outlook and response to the economic impact from the ongoing pandemic responses will be closely monitored.
- Following the weak NFP numbers at the beginning of the month last week’s weekly unemployment claims missed estimates significantly, with 965,000 initial claims. This week claims are expected to be better but to remain very elevated at 930,000.
- The vaccine rollouts are gaining traction globally, with Israel leading the way, with vaccinations running 24 hours a day. The positive vaccine news is tempered by increases in the new variants, which have proved to be very contagious, and increases in the number and length of lockdowns.
- This week the USDIndex found support at 90.00 and rallied to 18-day highs at 90.80, before once again turning lower. EURUSD moved down to 1.2075 before recovering but remained below 1.2150. USDJPY was capped around 104.00 in largely sideways moves. Cable slipped from 1.3700 but remains north of 1.3600.
- Global stock markets remain elevated but slipped from all-time highs, with the USA500 holding over 3800. Positive vaccine news and expectations of more fiscal stimulus from the US and Yellen’s “act big” speech continue to support investor sentiment.
- Q4 Earnings Season kicked off in fine style with big beats for JPMorgan, Goldman Sachs and Netflix but mixed results from Citi and Wells Fargo, with Morgan Stanley, IBM and Charles Schwab amongst others this week.
- The Gold price dipped again this week and tested the important 200-day exponential moving average at $1810 before recovering back to $1850. Bitcoin (and all the cryptocurrency marketplace) remains very volatile. BTC moved from $40,000 to close at $34,000 within a few hours this week.
- USOil prices continue to rally, this week peaking at $53.90 and again capped at $54.00. Prices are supported by increased positive sentiment and stimulus likely to lift economic output, but pandemic pressures and volatile inventories could limit the upside.
- The yield on the US 10-Year Treasury Note holds over the key psychological 1.0000 level and this week moved to 1.1290 before settling around 1.0900. The anticipation of a larger US stimulus package, record high stock markets and the weaker US Dollar keep yields bid and Treasury demand weaker.
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Stuart Cowell
Head Market Analyst
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