Archives of “January 29, 2021” day

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White House: US China trade deal among issues under review

  
  Analysis

White House responding to trade and security

The White House is out with a couple statements regarding trade and security and the transition from the Trump presidency. They say
  • US-China trade deal among issues under review in broad review of US – China policy
  • everything the Trump administration put in place in terms of national security is also under review
I would imagine that this is standard operating procedures.
With regard to the stock market volatility, the White House is saying that they will defer to US SEC when it comes to the volatility

Bank of Japan monetary policy meeting ‘Summary of Opinions’ of the January meeting

  
Analysis, Economy

The minutes of this meeting will be out in around 7.5 weeks (March 24), the summary is a good guide to what was discusses.

The Bank remained on hold at this meeting, with a policy review due in March.
Headlines via Reuters
  • BoJ must strengthen easing stance as risk of deflation has heightened further
  • One board member said the Bank should consider anew the cumulative effects of easy policy on matters such as financial intermediation, market functioning.
  • must consider how to balance the effects and side-effects of its policy

Robinhood update – draws credit lines, bolsters liquidity

  
  Analysis

An in summary update of where Robinhood is at.

  • the firm has drawn on credit lines in amounts said to be ‘hundreds of millions of $” by media reports
  • lenders to the company include banks like JPMorgan & Goldman Sachs
  • the firm has raised margins on trades
The causation runs:

 

  • Stock-trading clients of  Robinhood clients take on margin deb
  • Robinhood lends clients the cash to do this and, in turn, has drawn on credit to front the cash
  • the risk to the ‘Hood is if the stocks fall hard client margin debt may not get paid back
  • RobinHood moved to control this risk both by placing curbs on trades and drawingon credit lines.

US 10-year yields reject the break of 1%

  
  Analysis
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Yields quickly move back higher

Yields quickly move back higher
The chart of 10-year yields is an interesting one. There was the consolidation pattern at the top that broke down this week but now it has rejected the first test of 1% and bounced 6 bps to 1.06%.
It’s now testing the bottom of the old range and we’ll soon find out of there will be a broader range of consolidation or it will range from 1.00%-1.06%.
Notably, the bond market was a step ahead of stocks this week and that break lower came well ahead of the rout in equities yesterday. There has been a great pass-through to FX, but keep an eye on yields from here.

US dollar extends the decline as risk trades continue to march higher

  
Analysis, Forex

Fresh highs in the antipodeans and cable

This is turning into quite a day in the stock market as the S&P 500 rallies 80 points, or 2.1% in the best day of the year. The dip has been bought and yesterday’s huge decline is now nearly wiped out.
The banning of trading in meme stocks was the greenlight for ‘situation normal’ in markets and ‘situation normal’ means ‘buy the dips’.
It’s also a big unwind of the outside moves in currencies yesterday. The commodity currencies have now taken a bit bite out of yesterday’s losses and cable has completed the round trip. The move is extending as I write and AUD/USD.
Fresh highs in the antipodeans and cable

There might be a bit of resistance at 0.7700 in the short term.

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