Market movers today
- German Zew expectations have rebounded in recent months. Consensus looks for a slight drop today in the February reading to 59.5 from 61.8.
- The US Empire index has been sliding for four months reflecting softening momentum in the manufacturing sector. Consensus is for a small increase for February from 3.5 to 6.0.
- Otherwise focus continues to be on vaccine news and the coming US fiscal package.
The 60 second overview
Equities: It was a very quiet session yesterday as US and Chinese markets were closed for holiday. Futures are higher again this morning though, rising roughly 0.8% across indices in the US. Asian indices are very buoyant this morning, with Nikkei leading up roughly 2%. The value trade lingered in Europe, with Energy, Materials and Financials driving STOXX 600 1.3% higher. Global stocks have now reached a 13 day winning streak – the longest streak since 2003. Encouraging vaccine news, accommodative economic policies and better-than-expected earnings have all contributed to the rise.
Oil: Oil prices have so far had a good 2021. While encouraging vaccine news and a surprise Saudi Arabia output cut in January have been key the latest move higher has been aided by unusually cold weather on the Northern Hemisphere. Not least Texas in the US is currently experiencing artic conditions which has distorted oil supplies and left almost 4M people suffering from power outages. This morning Brent Crude trades at USD 63.5/bbl while the North American benchmark WTI has moved above USD 60/bbl for the first time since January 2020.
FI: The steepening of the curves between 10Y and 30Y continued yesterday, and the Bund spread tightened while the Buxl spread widened. Hence, there is still demand for the long end of the curve relative to swaps. The weekly PEPP data from ECB showed an increase in the weekly buying, but it has still not stopped the recent increase in yields or the steepening of the yield curve. We need the ECB to step up the PEPP coming weeks for the rise in yields to stop.
FX: Although yesterday was rather uneventful, risk sentiment was good supporting currencies like SEK and GBP while NOK, CAD and AUD were supported further by increasing commodity prices. EUR/GBP is trading at the lower end of the tight 0.87-0.88 range, EUR/SEK is eyeing 10.00 and EUR/NOK moved below the 10.20 support level.
Credit: Despite IG bonds widening slightly the overall risk-on sentiment remained intact in credit yesterday where iTraxx Xover tightened to 236bp (-6bp) and Main to 46bp (-1bp). HY tightened 2bp while IG was ½bp wider.
