𝙏𝙝𝙚 𝙫𝙤𝙡𝙖𝙩𝙞𝙡𝙞𝙩𝙮 𝙧𝙚𝙢𝙖𝙞𝙣𝙨 𝙞𝙣𝙘𝙧𝙚𝙖𝙨𝙚𝙙, 𝙚𝙨𝙥𝙚𝙘𝙞𝙖𝙡𝙡𝙮 𝙞𝙣 𝙩𝙝𝙚 𝙝𝙞𝙜𝙝-𝙩𝙚𝙘𝙝 𝙨𝙩𝙤𝙘𝙠𝙨. 𝙏𝙝𝙚 𝙧𝙚𝙥𝙧𝙞𝙘𝙞𝙣𝙜 𝙤𝙛 𝙩𝙝𝙚 𝙘𝙤𝙨𝙩 𝙤𝙛 𝙚𝙦𝙪𝙞𝙩𝙮 𝙘𝙤𝙣𝙩𝙞𝙣𝙪𝙚𝙨. 𝙏𝙝𝙚 𝘿𝙤𝙡𝙡𝙖𝙧 𝙬𝙖𝙨 𝙩𝙝𝙚 𝙢𝙖𝙞𝙣 𝙨𝙩𝙖𝙧 𝙤𝙛 𝙩𝙝𝙚 𝙬𝙚𝙚𝙠.
This week the $USDOLLAR index (DXY) rose as much as 1,2%. The US currency strengthened against all major currencies, as a consequence of the dynamic yield curve steepening. US 10y yields are already in the 150-160bps range. The impact of higher risk-free rates continues to dampen Growth stocks. The $NSDQ100 has massively underperformed again ending the week almost 2% lower, whilst the $SPX500 managed to eke out a small gain for the week.
👉 The week (and the month) started on a high tone and stocks surged 2-3% on Monday. The gains were led by Information Technology sector. The small cap index Russell 2000 ($IWM) also shined. Equities in general have very high negative correlation to 10Y yields – on Monday the yields fell, boosting stocks, which had a bad week before.
👉 CNBC: “On the stimulus front, the House passed a $1.9 trillion Covid relief bill, the American Rescue Plan Act of 2021, early Saturday. The Senate will now consider the legislation.”
👉 The reporting season’s final reports were still coming out last week too. $TGT (Target Corp) reported a strong quarter thanks to holiday season and the checks coming form the government. $ZM (Zoom Video Communications Inc) skyrocketed after blowout 4Q20 numbers and an upbeat forecast (sales growth 370% YoY!).
👉 $JNJ (Johnson & Johnson) Covid-19 vaccine was also accepted for use.
👉 Tuesday through Thursday stocks generally had a tough week, posting three-session loosing streak. The theme was all the same – the yields marching higher.
👉 Fed Chair J.Powell did not manage to calm the market’s fears in his conference on Thursday. The acknowledged inflationary pressures, but remained very comfortable not even thinking about moving Fed Fund Rates higher any time soon.
👉 February jobs report was better than expected. Nonfarm payrolls increased by 379,000 in February and the unemployment rate was 6.2%.
👉 On Friday stocks were losing ground intraday, but eventually turned back higher, posting a big turnaround and ending at daily highs.
👉 𝙀𝙛𝙛𝙚𝙘𝙩𝙞𝙫𝙚 𝙬𝙚𝙚𝙠𝙡𝙮 𝙞𝙣𝙙𝙚𝙭 𝙘𝙝𝙖𝙣𝙜𝙚𝙨: $SPX500 +0,8%, $NSDQ100 -1,9%, EuroStoxx600 +0,9%, $GER30 +1%, $JPN225 -0,4%.
𝗢𝘁𝗵𝗲𝗿 𝗺𝗮𝗿𝗸𝗲𝘁𝘀 𝗲𝘃𝗲𝗻𝘁𝘀:
👉 𝘽𝙤𝙣𝙙𝙨: the US yield curve (10y-FF) is wider again at 154bps, the German curve (10Y Bunds-3M) at 30bps. EuroArea AAA-rated bonds yield curve at 32bps. High Yield Spreads at 3,5.
👉 𝘾𝙤𝙢𝙢𝙤𝙙𝙞𝙩𝙞𝙚𝙨 (𝙚𝙭 𝙤𝙞𝙡): $GOLD -2%, $SILVER -5,3% on week.
👉 𝙊𝙞𝙡: +7,5% on week. Gaining more and more strengt on expectations of higher growth ahead.
👉 𝘾𝙪𝙧𝙧𝙚𝙣𝙘𝙞𝙚𝙨: DXY (Dollar Index) +1,2% on week, $EURUSD -1,3%.
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