Archives of “April 2021” month

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10 year yield moves higher and back above 100 hour MA

  
  Analysis

Solid floor at 1.530%

The 10 year yield bottomed stay at 1.5296% (call it 1.530%). That was near the swing lows from April 15 and April 21. The triple bottom is now a solid support level for yields.
Solid floor at 1.530%
The move back to the upside has taken yield back above the 100 hour moving average at 1.570%. The strength the yield also moved above the moving average line only to rotate back to the downside after moving to a high of 1.587%. That yield level also corresponded with the falling 200 hour moving average currently. It represents the next upside technical level that would need to be broken if the yield biases to continue in an upward direction.
Conversely, a move back below the 100 hour moving average would disappoint those looking for a run back to the upside in US yields.
Since topping at 1.774% back on March 30, the yield has rotated down through April. Most of the time since March 6 has been below the 200 hour moving average at the 1.587% level currently.

Eurozone April flash services PMI 50.3 vs 49.1 expected

  
  Analysis

Latest data released by Markit – 23 April 2021

  • Prior 49.6
  • Manufacturing PMI 63.3 vs 62.0 expected
  • Prior 62.5
  • Composite PMI 53.7 vs 52.9 expected
  • Prior 53.2

Some modest beats there, with the headline reading coming in at a eight-month high and the composite reading at a nine-month high. Of note, the manufacturing index and output sub-index are at record highs, since the series began in June 1997.

This just reaffirms a solid expansion in manufacturing activity with services also seen picking up marginally, although lagging much behind factory activity – which is led by Germany. Markit notes that:

“In a month during which virus containment measures were tightened in the face of further waves of infections, the eurozone economy showed encouraging strength.

“Although the service sector continued to be hard hit by lockdown measures, it has returned to growth as companies adjust to life with the virus and prepare for better times ahead.

“The manufacturing sector is meanwhile booming. Pent-up spending, restocking, investment in new machinery and growing optimism about the outlook have all helped fuel a further record surge in both output and new orders.

“The steep rise in demand for raw materials is continuing to lead to unprecedented supply chain delays, which are in turn driving up firms’ costs at the fastest rate for a decade. Consumer price inflation may well rise sharply in coming months as a result, though the extent of the rise will be dependent on the strength of demand and the supply situation, both of which remain highly uncertain at the moment.”

Bitcoin taking further hits lower – rumours of US tax on crypto will not go away

  
Analysis, BITCOIN

BTC is under US$52K

more to come

The latest unsourced rumour is of an 80% tax on crypto.
  • would be applied to capital gains
This seems very unlikely indeed, but there it is – that’s the rumour that appears to be the catalyst for the latest bout of weakness. If you don’t like it please feel free to go right ahead and shoot the messenger (metaphorically, in the comments please), for whatever good that will do you 😉
BTC is under US$52K
The weekend plunge in BTC was attributed to an electricity outage in China, a whale sale on this, and also on these tax rumours. Its the tax rumour mill that has persistently weighed since then. The background to all this is the Coinbase IPO the previous week, which seems to have been a peak BTC event for this run at least … selling has been relentless since.

Major indices close lower. Down 3 of 4 days this week

  
Analysis, US Market

Major indices down around 0.9% on the day

The major US indices all closed lower on the day with each down similar amounts of about -0.93%.
The final numbers are showing:
  • S&P index fell -38.44 points or -0.92% at 4134.90
  • Nasdaq down -131.8 points or -0.94% at 13818.41
  • Dow -321.41 points or -0.94% at 33815.90
Intel reported after the close and beat on the tops and bottom lines, but true to the earnings reaction, the stock is lower.

ECB leaves key rates unchanged in April monetary policy meeting, as expected

  
  Analysis

ECB announces their latest monetary policy decision – 22 April 2021

  • Prior decision
  • Deposit facility rate -0.50%
  • Main refinancing rate 0.00%
  • Marginal lending facility 0.25%
  • PEPP purchases over the current quarter to continue to be significantly higher
  • Reaffirms size of PEPP program at €1.85 trillion
  • PEPP purchases to be conducted flexibly according to market conditions
  • QE purchases will continue at monthly pace of €20 billion
  • ECB stands ready to adjust all of its instruments, as appropriate
  • Full statement
They are reaffirming their pledge of higher PEPP purchases until June but so far it hasn’t really been showing up in the data, at least not “significantly”. Other than that, the rest of the policy language appears to be unchanged. The ECB still retains the key passage:

The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.

Pretty much a non-event as they continue to maintain that PEPP is flexible with regards to timing and size, in that they don’t have to use the full envelope or can increase it.
Over to Lagarde next but barring any communication mishap, there shouldn’t be much for euro traders to chew on. As such, the technicals are still the key thing to watch.

Eurostoxx futures +0.6% in early European trading

  
Analysis, Global Indices

Positive tones observed in early trades

  • German DAX futures +0.5%
  • UK FTSE futures +0.5%
This builds on the gains from yesterday, as European equities are still clawing back the deep losses sustained on Tuesday. The more positive mood here also in part reflects some catch up to the surge in US equities – which closed at the highs.
US futures are looking rather flattish so far to start the session, while Treasury yields are a touch lower with 10-year yields down 2 bps to 1.535%.

Nikkei 225 closes higher by 2.38% at 29,188.17

  
Analysis, Global Indices

A solid rebound for Japanese stocks

The Topix also climbs 1.8% on the day amid the surge in US equities overnight and the BOJ stepping in for the first time this month with ETF purchases yesterday.
The bounce here sees both the Nikkei and Topix move off its 100-day moving average to keep above the key technical level for the time being.
Elsewhere in the region, the Hang Seng is up 0.6% while the Shanghai Composite is down 0.3% in a bit more of a mixed mood. US futures are flattish as we look to get into European morning trade.
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