𝗔 𝗰𝗮𝗹𝗺𝗲𝗿 𝘄𝗲𝗲𝗸 𝗯𝗲𝗵𝗶𝗻𝗱 𝘂𝘀 𝘄𝗶𝘁𝗵 𝗺𝘂𝗰𝗵 𝗹𝗲𝘀𝘀 𝘀𝘄𝗶𝗻𝗴𝘀 𝗮𝗻𝗱 𝘃𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆. 𝗠𝗮𝗶𝗻 𝗶𝗻𝗱𝗶𝗰𝗲𝘀 𝘀𝘁𝗮𝘆𝗲𝗱 𝘄𝗶𝘁𝗵𝗶𝗻 𝗮 𝗿𝗲𝗹𝗮𝘁𝗶𝘃𝗲𝗹𝘆 𝗻𝗮𝗿𝗿𝗼𝘄 𝗿𝗮𝗻𝗴𝗲 𝗼𝗱 𝗮𝗽𝗽𝗿𝗼𝘅𝗶𝗺𝗮𝘁𝗲𝗹𝘆 𝟮%. 𝗖𝗹𝗶𝗺𝗯𝗶𝗻𝗴 𝟭𝟬𝗬 𝗿𝗮𝘁𝗲𝘀 𝗿𝗼𝗶𝗹𝗲𝗱 𝗵𝗶𝗴𝗵 𝘁𝗲𝗰𝗵 𝘀𝘁𝗼𝗰𝗸𝘀 𝗮𝗴𝗮𝗶𝗻.
The $SPX500 managed to tip a new ATH and so Did the $DJ30, whilst $NSDQ100 still suffers from higher cost of capital. The 10Y treasury yield marched above 170bps already.
L𝗮𝘀𝘁 𝘄𝗲𝗲𝗸
👉 The week started with new ATHs ex Nasdaq, as rates corrected. Tuesday was also not very interesting really.
👉 On Wednesday the FOMC kept rates unchanged and gave a message to keep them at close to zero through 2023. They also upped their GDP growth forecasts for this year from 4,2% to 6,5%. Pretty bullish. Mr. Powell also stated that he 1st wants to see a material and sustained move higher in inflation before changing policy. The Fed is extremely determined to see prices higher, no wonder the move in 10Y rates is so dynamic lately.
👉 Stocks then sold off on Thursday as, guess what??, rates went higher! 🙂 This explanation of why stocks swing this or that way will stay with us for as long as it starts being boring. Justas did US elections in 2H20 and the 2nd stimulus bill. The market needs to have a focus on something. This time around it’s the rates.
👉 Financials sold off on Friday, as the Fed decided not to prolong capital breaks for banks due to Covid-19. This will soak up some of the banking sector liquidity going forward, but it;s still plenty, so should not be game changer for the eocnomy.
👉 𝙀𝙛𝙛𝙚𝙘𝙩𝙞𝙫𝙚 𝙬𝙚𝙚𝙠𝙡𝙮 𝙞𝙣𝙙𝙚𝙭 𝙘𝙝𝙖𝙣𝙜𝙚𝙨: $SPX500 -0,8%, $NSDQ100 -0,5%, EuroStoxx600 +0,0%, GER30 +0,8%, JPN225 +0,3%.
𝗢𝘁𝗵𝗲𝗿 𝗺𝗮𝗿𝗸𝗲𝘁𝘀 𝗲𝘃𝗲𝗻𝘁𝘀:
👉 𝘽𝙤𝙣𝙙𝙨: the US yield curve (10y-FF) is wider again at 170bps, the German curve (10Y Bunds-3M) at 32bps. EuroArea AAA-rated bonds yield curve wider again at 36bps. High Yield Spreads at 3,5.
👉 𝘾𝙤𝙢𝙢𝙤𝙙𝙞𝙩𝙞𝙚𝙨 (𝙚𝙭 𝙤𝙞𝙡): GOLD +1,1%
👉 𝙊𝙞𝙡: -6,3% on week.
👉 𝘾𝙪𝙧𝙧𝙚𝙣𝙘𝙞𝙚𝙨: DXY (Dollar Index) 0,0% on week, EURUSD -0,4%.
Best, GlobalAlphaS
Disclaimers: None of the ideas, views and thoughts presented here shall ever be taken as a recommendation to buy or sell stocks,bonds,FX,commodities or any other financial instruments as stated in REGULATION (EU) No 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC or the Polish Act of 10 February 2017 amending the act on trading in financial instruments and some other acts. The article is for educational reasons and purely presents private views of the author, thus the author shall not be held accountable for any losses of a third party resulting from any potential trading activities in any instruments, both specifically or by category of assets. The author uses his best knowledge and data from sources believed to be reliable, but makes no representations as to the accuracy of the data.Full Disclaimers&Liability Limitations page.
