Archives of “February 8, 2021” day

rss

Eurozone February Sentix investor confidence -0.2 vs 2.0 expected

  
  Analysis

Latest data released by Sentix – 8 February 2021

  • Prior 1.3

Euro area investor morale surprisingly slips in the latest Sentix survey as lockdown measures as woes surrounding the vaccine rollout weigh on sentiment.

The current situation index fell from -26.5 in January to -27.5 while the expectations index declined from an all-time high of 33.5 in January to 31.5 in the latest reading.
Sentix notes that:

“The lockdowns in may European countries are leaving their mark. As a result, the EU economy is losing touch with the other regions of the world, which are continuing their recovery course in the month of February.”

Adding that broader sentiment was held back by the slow vaccine rollout across the EU and that the US is looking at a much stronger recovery path than Europe.

SNB total sight deposits w.e. 2 February CHF 704.3 bn vs CHF 704.6 bn prior

  
  Analysis

Latest data released by the SNB – 8 February 2021

  • Domestic sight deposits CHF 640.2 bn vs CHF 637.4 bn prior
Prior week’s release can be found here. Overall sight deposits ease a little in the past week as the SNB appears to have taken its foot off the pedal in recent weeks. The more positive market mood has helped in that regard but you can bet that the SNB stands ready to chime in if and when necessary should the franc return into favour moving forward.

 

Nikkei 225 closes higher by 2.12% at 29,388.50

  
Analysis, Global Indices

The Nikkei posts its highest close since August 1990

Nikkei 08-02

Asian equities are buoyed by US stimulus hopes, with Japanese stocks helped by stronger corporate earnings and also a report suggesting that state of emergency measures may be lifted in Japan after a new law has been passed.
The latter sees Japan pass a law allowing for fines against social distancing violators and that may allow local governments to curb the virus spread without the need for prefecture-wide restrictions as we are seeing now.
Elsewhere, the Hang Seng is up 0.3% and the Shanghai Composite is up 1.0% going into the closing stages. S&P 500 futures are up 0.4% currently.

USD/JPY creeps higher as risk appetite continues to improve

  
Analysis, Forex

USD/JPY up 15 pips

Japanese stocks are racing higher with the Nikkei now up 1.5% to the best levels of the year.
S&P 500 futures are up 16 points (+0.4%) after a 15 point gain. I expected that vaccine efficacy news might hurt sentiment but on the flipside, it appears that Biden and Congress are leaning into a big stimulus package and that’s dominating sentiment.
USD/JPY up 15 pips
Zooming out, USD/JPY is flirting with the 200-day moving average. CitiFX is out with a note highlighting heavy options expiries at 105 on thinner liquidity around the lunar new year.

USDJPY daily

China drains liquidity from markets ahead of Lunar New Year

  
Analysis, Forex

China has withdrawn 320 billion yuan ($49.5 billion) from financial markets in about two weeks, as authorities focus on removing excess liquidity to tame the surge in property and asset prices.

It is rare for China to curb liquidity ahead of the Lunar New Year holiday, which starts on Thursday this year. The move could hinder the country’s economic recovery from the coronavirus-induced slump, with effects spilling into overseas markets as well.

Though the People’s Bank of China said Friday it would inject 100 billion yuan into the markets ahead of the holiday, another 100 billion yuan worth of operations matured that day, resulting in no net change to liquidity. The two-week interbank lending rate remains relatively high at almost 3%.

The overnight rate topped 6% at one point in late January.

China’s central bank usually increases liquidity in the weeks leading up to Lunar New Year, when many Chinese return to their hometowns or travel. The bank had injected 600 billion yuan into the markets by a week out in 2020, and 500 billion yuan in 2019.

Less demand for cash than usual is possible, as authorities discourage travel due to the pandemic. (more…)

Yellen says US could reach full employment next year with $1.9T stimulus package

  
  Analysis

Yellen on the proposed stimulus package

Yellen on the proposed stimulus package
Treasury Secretary Janet Yellen offered a hint that rates could rise sooner than expected if a $1.9 trillion stimulus package passes Congress.
The for Fed chair didn’t touch on monetary policy but said the US could return to full employment in 2022 if the plan passes.
She also touched on the inflation outlook in the interview with CNBC, saying that the “most important risk” was failing to do enough and that too many small businesses were closing.
“We have people suffering, particularly low-wage workers and minorities and through absolutely no fault of their own. We have to get them to the other side and make sure this doesn’t take a permanent toll on their lives. So, we need a package that’s big enough to address this full range of needs,” she said.
On inflation, she said they have the tools to deal with it if it arises.

Oxford/AstraZeneca vaccines not effective against South African variant – study

  
Analysis, COVID-19

Troubling development

Troubling development
There is a small bent towards risk aversion in early trading and I suspect it will worsen on a report that the Oxford/AstraZeneca is not effective against preventing mild to moderate infections of the South African variant of covid-19.
A soon-to-be published study of 2026 mostly healthy and young people showed it did not appear to offer protection (update: it’s now confirmed). None were hospitalized or died but the study says it’s too early to draw any conclusions about severe cases.
Earlier reports from Johnson & Johnson and Novavax also warned their vaccines were less effective against the strain. Studies are ongoing. Another study showed the Moderna vaccine was shown to be significantly less effective against the strain and the company is working on a booster shot and a reformulated vaccine.
In terms of markets, they’ve been able to shrug vaccine setbacks off but we’re coming off the best week for US equities since November so there’s some vulnerability. Commodity currencies are slight lower in (very) early trading.

Oil is off to its best start in 30 years

  
Analysis, Crude

Oil up nearly 20% year-to-date

Oil up nearly 20% year-to-date
Is there a more-overlooked asset than oil this year?
It’s been written-off for dead with investment fleeing the sector but oil inventories will be rapidly drawn down in the months ahead. OPEC+ will face increasingly tough decisions about what to do and the March decision could be the difference between $60 oil or much more.
Inflation is still way off the market’s radar but an unexpected spike to $80 or higher in 2022 could flip the script.
Go to top