Archives of “March 2021” month

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Goldman Sachs is comfortable with the stupendous level of US debt

  
  Analysis

Goldman Sachs urge “new thinking on fiscal sustainability”

(I didn’t make that up)
Says GS:
  • Many investors and policymakers are accustomed to thinking about fiscal sustainability in terms of the debt-to-GDP ratio, which will soon rise to the highest level in US history.Β 
  • In a recent study, Jason Furman and Lawrence Summers argue thatΒ a better measure of the debt burden is real interest expense as a share of GDP, which captures the cost of servicing the debt, adjusting for inflation. That measure is currently at a more historically normal level.Β 
Although its fun to have a giggle at GS and their defence of the level of debt that they cite (bolded above) its becoming more accepted, especially amongst those doing the spending. Not just in the US either.
And, we ain’t here to fight with trends, right?
More:
  • Debt-servicing costs are low for now
  • even the further increases in yields that our interest rate strategists forecast would leave debt-servicing costs well within the normal historical range

US Treasury Secretary Yellen says today was a pivotal day for the US economy

  
  Analysis

Yellen is referring to theΒ US Congress approving the US$1.9 tln coronavirus relief bill

More:
  • ready to get to work implementing the virus relief package
  • rather than a long, slow recovery, I expect we could reach full employment by as soon as next year
Full employment by 2022 is good news, though it m right leave Fed Chair Powell considering his options on dialling back monetary stimulus sooner than expected.
Yellen also with the tweets:
yellen, tweet

S&P 500 closes up 0.6% after another wild ride

  
Analysis, US Market

Meme stock insanity continues

  • S&P 500 +23 points to 3899, +0.6%
  • DJIA +1.4%
  • Nasdaq -0.1%
  • Russell 2000 +1.8%
There were some big swings in sentiment throughout the day. The the low CPI number calmed nerves and then decent 10-year auction also helped.
The ‘two markets’ theme I’ve been highlighting was particularly noticeable today as broad markets and small caps cheered lower rates but the Nasdaq was in its own world after yesterday’s surge.
Shares of GameHost went on an absolutely insane ride, hitting the record closing high of $347 and then crumbling to $172 only to rebound again to $264 at the close. Expect more of the same after hours. The most highly-traded option was an $800 call expiring Friday.
Meme stock insanity continues

US sells 10-year notes 1.5230% vs 1.5143% pre-sale

  
  Analysis

Results of the $38 billion reopening

  • WI at 1.520% vs 1.515% on the bid/offer ahead of the sale
  • 1.5143% was the yield in the same issue ahead of the sale
  • Bid to cover 2.38
  • Prior bid to cover was 2.37
There was a pretty big bid in bonds ahead of the sale and the yield fell to the lows of the day, which is counter-intuitive to what everyone feared. The results have been lackluster and a 1 bps tail could cause some worries but when you compae it to the pre-auction move, it’s tame.
I think the market will shrug this off. Onto 30s tomorrow.

US 10 year yield tips into negative territory

  
  Analysis

Yield moves toward the low for the day at 1.5177%

TheΒ U.S. Treasury will auction off $38 billion of 10 year notes at 1 PM ET. Ahead of that auction, the 10 year yield has recently moved back down into negative territory for the day. It currently trades at 1.523%, down -0.3 basis points. The low yield for the day was earlier at 1.5177%. The high yield for the recent cycle move higher reached 1.6238% on Friday.
Yield moves toward the low for the day at 1.5177%_
The move lower has pushed the yield further away from its 100 hour moving average at 1.5513%. Yield has been trading above and below that moving average over the last two trading days as traders ponder if yields have gone far enough.
Technically, although below its 100 hour moving average, the yield remains aboveΒ a trendline on the hourly chart at 1.5069%, and the rising 200 hour moving average at 1.4966%. Back on March 2, the yield tested that 200 hour moving average for the first time since February 11, and found support. The yield has not closed below its 200 hour moving average since February 1, 2021.
The tech heavy NASDAQ has been particularly sensitive to interest rates of late. As a result, the auction at 1 PM will be key for that index. It remains above itsΒ 50 hour moving average at 13063.82, but below itsΒ 100 hour moving average at 13297.60 (currently trading atΒ 13136.50)

Major European shares close higher on the day

  
Analysis, Global Indices

German DAXΒ closes at all-time high for the third consecutive day

TheΒ major European indices are closing higher for the third consecutive day.Β  TheΒ German DAX closes atΒ all-time high once again (3rd day in a row).
TheΒ provisional closes showing
  • German DAX, +0.7%
  • France’s CAC, +1.1%
  • UK’s FTSE 100, unchanged
  • Spain’s Ibex, +0.18%
  • Italy’s FTSE MIB, +0.4%

A snapshot of the Forex market shows the NZD is the strongest, while the CHF is the weakest. The USD hasΒ been waffling between marginally higher and marginally lower in trading today.

In other markets:
  • Spot gold isΒ riding up and down with the US dollars.Β  ItΒ currently is up $0.65 or 0.04% at $1717.
  • Spot silver is up 3.8 cents or 0.15% at $25.97
  • WTI crude oil futures are down $0.51 among 0.81% at $63.49
  • Bitcoin is trading up $2270 or 4.18% of $56,600
In the US that market, yields are marginally higher with the biggest jump in the 30 year bond yield. It currently trades up 2.9 basis points at 2.26%.
TheΒ U.S. Treasury will auction off 10 year notes at 1 PM. The current yield is at 1.5369%, up 1.06 basis points.Β Tomorrow they will auction off 30 year bonds.
In the US stock market, the down industrial average is taken over as the strongest of the three major indices. The NASDAQ index is the least favorable once again as rotation at of the tech into the cyclicals resumes.
  • S&P index up 24 points or 0.62% at 3899.21
  • NASDAQ indexΒ up 28 points or 0.22% 13102.67
  • DowΒ up 386 points or 1.21% at 32220

GameStop back at it again as pre-market trades up 18%

  
  Analysis

That puts it on track for the highest open since 1 February

GME
As much as the rebound in tech yesterday was impressive, GME is doing its thing again as it shoots higher in pre-market trading once more today.
As of the close yesterday ($246.90), the price of the stock has jumped by nearly 143% for the month of March itself. And that looks set to continue again today.
GME
For all the focus on Treasury yields and the broader risk sentiment in the past few weeks, it’s still a meme world in some quarters of the market.Β Β Β―\_(ツ)_/Β―
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