The Market Week – February Week 3
- The focus of attention this week moved back to the Bond markets as Treasury prices fell and yields rose. This move also pressured the Japanese Yen, the commodity currencies and Gold.
- Unemployment remains stubbornly high globally. In the US weekly claims once again disappointed, missing expectations, and are over four times the normal level. This week they are expected to be 775,000.
- The vaccine rollouts continue to gain traction globally (over 53 million in the US and over 15 million in the UK) and the signs of the pandemic easing continue, after the WHO reported a fall in cases for a fifth consecutive week. However, the positive vaccine news is tempered by increases in the new variants, which have proved to be very contagious.
- This week the USDIndex moved up from lows at 90.20 to test 90.80. EURUSD moved from 1.2165 highs to below 1.2100, to test 1.2050. USDJPY was a significant mover too, reversing from under 104.50 to breach 106.00. Cable breached 1.3900, stalled before 1.3950 and then reversed to 1.3860.
- Global stock markets remain elevated and have once again posted new all-time highs. The USA500 held over 3,900 and posted a high at 3,965. The USA100 remains the best performer, trading over 13,900.
- Q4 Earnings Season continues to beat to the upside, with over 83% of companies reporting better than expected results. This week includes Walmart and the major hotel chains Hilton, Hyatt and Marriott.
- The Gold price crashed below $1800 and the important 200-day exponential moving average again this week as the non-yielding precious metal suffered. The low in November was $1765. Bitcoin grabbed the headlines too breaching the big psychological $50,000 as news of more corporate interest broke.
- USOil prices continued to rally; supported by extreme weather in US southern states, the price breached and held over $60.00. Prices are supported by the increased positive sentiment and stimulus which is likely to lift economic output, and the fading of pandemic pressures.
- The yield on the US 10-Year Treasury Note holds over the key psychological 1.000 level and tested 1.3330 this week to post an 11-month high. The anticipation of a larger US stimulus package, record high stock markets, and the spectre of rising inflation are combining to keep yields elevated.
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Stuart Cowell
Head Market Analyst
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