Tue, May 18, 2021 @ 22:58 GMT
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Stocks Stayed in Up Trend, Yields Range Bound, Dollar Lost Downside Momentum

Market debates heated up last week with the influx of some US economic data. On the other hand, the concerns on overheating inflation was legitimate given the much stronger than expected headline and core CPI reading from the US. On the other hand, poor retail sales, and prior week's...

Inflation Fear Prompted Selloff in Bonds and Stocks, Dollar Extending Recovery

Extremely higher volatility was seen in the markets overnight, with the steep decline in stocks and rally in yields. Bitcoin also had a free fall. Negative sentiments continue in Asia with major indexes trading in deep red. In the currency markets, Australia and New Zealand Dollars are under most...

Strong US inflation prompted deep selloff in DOW and strong rise in yield

US stocks tumbled sharply overnight after the big upside surprise in consumer inflation reading. Technically, while the pull back in stocks was deep, there is no threat to the up trend yet. However, the simultaneous strong rise is 10-year yield is worth a note. Correction in stocks could extend...

CPI Even Higher than Expected. Is the Inflation Transitory?

The April CPI (YoY) data released earlier was expected to be high due to a “basing effect”, or the manner in which the number is calculated due to last springs high inflation.  And indeed, it was, printing a 4.2% headline number (vs 3.6% expected) and 3.0% for the core...

Dollar Tumbled Broadly, Stocks Hit Record, as Data Affirmed Fed’s Patient Approach

Dollar dropped broadly last week and ended sharply lower, as the huge non-farm payroll miss gave a strong node to Fed's patient approach. Progress could only be consider substantial as seen in realized economic data, rather than projected outlook. It's right that Fed is not even in a position...

Pull Back in Treasury Yields Boosted Stocks to New Record, Dollar Set Up for More Downside

Dollar tumbled broadly again as falling treasury yield pushed US and German stocks to new record highs. Near term trend in the greenback should have reversed, but it's unsure whether it's ready for medium term down trend resumption yet. At least, EUR/USD will have to break through 1.2 handle...

Week Ahead: Geopolitical Tensions Resurface, ECB, BOC, and NFLX Report

The next hint of market direction may come from somewhere unexpected Last week the headlines were about continued economic strength on re-openings in richer countries and increasing coronavirus cases in poorer countries.  Geo-political tensions also resurfaced.  Russia and the US go tit-for-tat over a buildup of Russian forces near Ukraine...

Falling Yields Boosts Stocks and Sentiments, Dollar in Consolidations

Sharp decline in US treasury yields overnight boosted DOW and S&P 500 to new record highs. Positive sentiments also somewhat carried on in Asian session today, as supported by solid data from China. The forex markets are quiets, however. Dollar is recovering some of this week's losses, but remains...

The Rise of the US Dollar and Yields into Month/Quarter End

In our Week Ahead for last week, we highlighted the daily US Dollar Index (DXY) as the Chart of the Week.   We noted that price had broken out of a flag pattern on the daily timeframe and was heading towards the target price from the flag breakout and a...

Yen Drops Broadly as Yields Rose on Optimism

Yen trades generally lower today following surging treasury yields and some firmness in stock markets. While it's not yet a full risk-on market, sentiments are positive for now. Swiss Franc, Euro and Dollar also turn slightly softer. On the other hand, commodity currencies and Sterling are trading generally higher. Technically,...

US yields jumped again on vaccination optimism

US long term treasury yields jumped again overnight, with 10-year yield closed up 0.061 at 1.721, 30-year yield gained 0.057 to 2.424. Sentiments were positive on vaccine rollouts and return-to-normal in the US. President Joe Biden announced that the "vast, vast majority of adults", 90%, will be eligible for...

Yields and Yen: A Negative Relationship

Yields and Yen are not friends.  They actually have been running away from each other lately.  However, this dysfunctional relationship has led to some nice profits for bond and Yen traders.  With the benchmark US Treasury yield trading up at January 2020 levels, near 1.66%  (pre-pandemic), the Yen has...

Sentiments Turned Cautious on Yields and Infections, But Stay Positive

US treasury yield jumped last week after Fed gave way to more yield strength. In the background, there were some concerns over resurgence of coronavirus infections in some countries like France, Brazil and India. There was also risk of slower than originally expected vaccine rollouts. Tensions between US China...

Yields Rise, Stocks and Oil Plunge, Yen Shrugs BoJ

Renewed surge in US treasury yields overnight sent stocks lower. Risk-off sentiments continued in Asian session general. Australian Dollar is currently the worst performing one for the day, weighed down further by weak retail sales data. Canadian Dollar is following as second weakest, as oil priced tumbled. Swiss Franc,...

US 10-year yield accelerates up again, targeting 2% next

Selloff in US treasuries was again the major theme in the markets overnight. Both 10- and 30-year yield jumped sharply and closed at the highest level since the pandemic. Fed was clear that it's not going to tweak its asset purchases for now, and gave a nod to the...

Sentiments Weighed Down by Unstoppable Yields, Dollar Recovers

Sentiments appear to be weighed down by the upstoppable rally in treasury yields again today. At the time of writing, US 10-year yield is trading above 1.75 handle while Germany 10-year bund yield is at -0.25. US futures point to lower open, with weakness seen particular in NASDAQ again....

DOW, SPX and DAX Hit Records While US Yield Surged, CAD Shone

Global equities struck a strong note in ending last week, with help from fresh US stimulus and ECB's pledge to accelerate asset purchases. Yen, Dollar and Swiss Franc ended as the worst performing ones. Canadian Dollar was the strongest on the back of risk-on sentiment, while additional supported up...

Sentiments Approved after US 10-Yr Auction, ECB Comments on Yields Awaited

Australian Dollar leads other commodity currencies higher today on improved market sentiments. Asian stocks are trading generally higher, following the record close in DOW overnight. Investors found some comfort from the soft yet acceptable 10-year auctions. Dollar, Yen and Swiss Franc turn softer as a result. Now, focus will...

US 10-year yield to settle in 1.4/1.6 range as bond auction cleared investor fears

The closely watched US treasury bond auction overnight was soft, but enough to temporarily ease investors' worry of an avalanche collapse in demand. USD 38B in 10 year treasuries were sold, with bid-to-cover ratio of 2.38, just slightly below one-year average of 2.42. Focus will now turn to 30-year...

Shady US CPI Data; 10 Year Auction and ECB ahead

The highly anticipated CPI data for February was released earlier today, and the core data was slightly worse than expected.  The headline CPI print for the more closely watched YoY rate was in line at 1.7% vs 1.4% in January.  However, the Fed is more concerned about the core...

US Auctions Will Be Closely Monitored This Week!

This week, the US Treasury will be auctioning off the following: Tuesday: 3-year notes Wednesday: 10-year notes Thursday: 30-year bonds In addition, the Treasury will also be issuing a few short-term duration bills (less than 1 year). There is also a good deal of corporate bond supply this week. Recall on...

10-Yr Yield Couldn’t Break Loose from 1.5 Magnet, Dollar and Canadian Soared

Strong treasury yield continued to be a major theme last week. But for now, it seemed 10-year yield could still break loose from the "magnetic field" of S&P dividend yield at around 1.5%. Indeed, US stocks, including NASDAQ staged a strong rebound on Friday, as 10-year yield settled back...

Yields Surged, Stocks Tumbled after Fed Powell, Dollar in Half-Hearted Rally

Fed Chair Jerome Powell's lack of concrete hint on action against rising nominal rates sent treasury yield higher, and stocks lower overnight. Dollar rode on risk aversion and jumped sharply higher. Nevertheless, the greenback's rally was concentrated against Euro, Swiss Franc and Yen only. Sterling, Canadian, and Australian are...

US 10 year yield jumped as Fed Powell left no hint on operation twist

US treasury yields surged again while stocks tumbled overnight after Fed Chair Jerome Powell failed to provide any guidance on what Fed would do regarding recent sharp rise in long-term yields. That left markets wondering how far Fed would allow the yield curve to continue to steepen. Powell noted that...

Is Operation Twist in the Fed’s future?

Fed Chairman Jerome Powell is speaking today on the US economy at 12:00pm EST at the WSJ Jobs Summit.  The Fed has a dual mandate to keep inflation between its target of 2% to 3% and to maximize employment.  Inflation expectations have been rising over the last month given...

A Wild Week of Metals, Yields, Stocks and Dollar

Just after DOW hit new record high in the middle of last week, the rally was choked by skyrocketing treasury yields. Dollar surprisingly ended as the strongest one for the week, followed by Euro and then Sterling. Australian Dollar suffered most as it reversed some of the month's gains....

Yields Up, Stocks Down, Dollar and Yen Rebound

US stocks suffered steep selling overnight on sharp rally in treasury yields, and the selloff carried forward to Asian markets. Yen and Dollar ride on the turn in risk sentiments and rebounded, together with Dollar. Australian and New Zealand are in deep pull back, together with Sterling. Euro and...

10-yr yield breaks 1.5 after awful debt auctions, heading to 2%?

The fast acceleration in US yield was a major shocker to the markets overnight. Fed officials are generally unconcerned with recent rally. They even sounded upbeat about the development in the bond markets. But some analysts pointed to the poor demand in the "awful" bond auctions overnight. Now that...

The beginning of the End for Stimulus?

“The Fed is always last to know” the saying goes.  Fed officials (and central bankers around the world) have been dovish to say the least over the last year.  More recently, as bond yields have been climbing, Fed members have been outspoken talking about how inflation is not a...

Dollar Firm after 10-yr Yield Breached 1.3, But Near Term Resistance Still Intact

The strong rally in US treasury yield overnight pushed Dollar notably higher. The greenback is indeed the second strongest one for the week, just next to Sterling. Canadian Dollar is following closely with support by resilience in oil prices. ON the other hand, overall risk-on sentiment is keeping Yen...