Archives of “February 2021” month

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US yields come off there high levels

  
  Analysis

Helps to spur US stock indices higher

The US yields have come off there high levels as chair Powell sticks by his story of low inflation (with the possibility of transitory increases) and high unemployment.

The 10 year yield is trading at 1.382%, up 4.0 basis points. That is a down from the high yield of 1.4337%.
The 30 year yield is trading at 2.237%, up 5.7 basis points but down from the high of 2.291%.
The lower yields and Fed chair comments have helped to push the major indices higher.
The Dow industrial average is now trading at new all time highs at 31779.81.
The NASDAQ index is now positive that +38.31 points or 0.28% at 13503.40. It’s high price reached 13513.71.
The S&P index is also trading near its highs at 3905.23. The high prices just above that a 3905.56. The index is up 23 points or 0.59% on the day.
The Russell 2000 index is leading the way with a gain of 1.91% or 42.77 points to 2274.08. It too is trading at its highs for the day

Fed’s Powell: Bond buying will continue the current pace

  
  Analysis

Fed’s Powell testifies before House Committee on Financial Services

Fed's Powell testifies
  • Bond buying will continue our current pace until see the actual data moving closer to inflation, employment goals
  • This will be the year in which the Fed engages with public on digital dollar
  • Communicate as far in advance as possible on progress
  • could will need legislative authority for for digital dollar
  • there is a lot of slack in the labor market
  • there is a long way to go to maximum employment
  • Fed is doing outreach research, consultation on climate risk to financial institutions he is confident that can reach 2% inflation and moderately exceeded
  • we want to see inflation expectations anchored at 2% not below
  • we believe we can do it, we will do it, it may take more than 3 years
US stocks have scene the S&P index moved back toward unchanged and marginally positive. The Dow industrial average has also moved back into the black.. Disney shares have moved above $200 for the 1st time.
The NASDAQ index still lags with a decline of -0.69% at 13372.24. But that is still off its lows of 13286.59.
More Powell highlights:
  • capital big banks has risen, they can keep blending
  • situation very different to global financial crisis
  • need a strong recovery, continued support from monetary policy
  • weakness in the economy now is unusually concentrated in sectors that depend on close contact
  • single best growth – creating measure is ending pandemic: need vaccination, mask wiring

Crude oil inventories showed a build of 1.285M vs – 6.5M estimate

  
Analysis, Crude

Crude oil inventories are congruent with the private data

  • crude oil inventories +1.285M vs. -6.5M estimate
  • gasoline inventories 0.012M vs -3.5M estimate
  • distillates -4.969M vs. -4.00M estimate
  • refinery utilization -14.5% vs. -7.0% estimate
  • crude implied demand 14115 vs. 17735 last week
  • gasoline demand 7723.9 vs. 8982.7 last week
  • distillates 46339 vs. 5424.9 last week
The price of crude oil for April delivery is trading at $63.04. The high price reached $63.09. That is a new cycle high. The high price yesterday reached $63

Franc meltdown continues as risk tones keep calmer in European trading

  
Analysis, Forex

EUR/CHF climbs to 1.1050 levels, nearing the October 2019 highs

EUR/CHF D1 24-02

The franc is the biggest loser on the week so far in the major currencies space and that owes somewhat to a breakout in EUR/CHF as the pair climbs to its highest levels since October 2019 today, nearing resistance at around 1.1059.

The meltdown in the franc over the past two days is also helped by the turnaround in sentiment with US equities rebounding strongly after Fed chair Powell’s testimony yesterday, and also as European investors are brushing aside the risk averse tones earlier.
Risk sentiment overall remains rather fragile but they are much improved at the moment as compared to Asian trading and the currency traders are running with that.
CAD/CHF D1 24-02
Another notable franc cross to watch is CAD/CHF as it extends a breakout from last week to fresh one-year highs – solidifying a break above the June 2020 high @ 0.7203.
Elsewhere, GBP/CHF has also posted a solid month of gains, trading up by ~700 pips in February as it nears 1.2900 and a test of long-term key resistance trendline:
GBP/CHF D1 24-02
With regards to franc sentiment, I’d still go back to EUR/CHF as the main driver but given the relative outperformance of the pound, GBP/CHF still has that going for it.
Hence, if EUR/CHF does break higher above 1.1059, it paves the way for further gains in franc crosses in the bigger picture, all things being equal that is.

The Hang Seng suffers biggest daily drop since May last year amid HK’s first trading tax hike since 1993

  
Analysis, Global Indices

China investors sell a record $2.6 billion worth of Hong Kong stocks

HSI

The selloff in the Hang Seng and Chinese markets is one the big stories in Asian trading today, which in part is also contributing to the softer risk mood earlier. At the close, the Hang Seng is down 3% and posts its biggest daily drop since 22 May last year.

This comes after the Hong Kong government announced to increase stamp duty on stock trades for the first time since 1993, provoking an exodus of Chinese investments.
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