Sunday 28 February 2021

Week to Feb 26th

Markets pull back, Powell Humphrey-Hawkins testimony, Bonds and Gold also collapse

In a week that saw nothing surprising in the news, ie no changes in the stimulus plan, the vaccine rollout or The Fed’s stance, as expounded in the Humphrey-Hawkins testimony from Chair Powell, we got a chance to see underlying sentiment.

It is easy to believe the market is bullish, as Gold, bonds and JPY made new five-month lows this week. However, there was a clear underperformance in NDX this week, which never improved on its opening gap down and DJI which actually made new highs. The danger is that the pullbacks in the last couple of weeks may mean investors are moving to cash, perhaps expecting a ’no hiding place’ pullback, a general collapse in sentiment across all asset classes, reminiscent of March 20, and unlike Q4/18, where conventional havens were available. It does of course also mean with uninvested cash, the recovery from the correction will be swift. The problem with trying to interpret haven assets in March 20 is that equities fell first.

This week saw USD move up suddenly, but not buy much and well within the 89.20-91.60 (2.7%) range it has run all year. Note that moves to dollar cash from dollar instruments (such as ETFs), the majority of transactions, do not of course affect the dollar itself. The V-shaped (or inverted) charts for the currency and foreign indices confirm this consolidation.

Mon Feb 22

Markets fell today, as the pullback continued. The general feeling was that this is the start of a correction after the election to January rally, and NDX fell further than SPX, although FANG, in general didn’t fall as far as NDX in general. USD was down across the board meaning Gold was up 1.50%. The equity pullback did not affect Oil which continued this week’s rally making a new 13-month closing high. Unusually, bonds were also slightly up on the day.

Tue Feb 23

Today was a wild ride, with NDX down as much as 3.9% at one point, before recovering most of the drop. SPX followed a similar path and ended 0.13% up. All part of a correction. The dollar was surprisingly quiet, flat with little volatility. Gold was similarly flat. Bonds were up and Oil was down in line with risk-off mood.

Wednesday February 24

Chair Powell today reiterated his dovish stance in the Humphrey-Hawkins testimony, and markets rose late in the day after falling at the open. Bonds followed stocks inversely, ie the yield chart looks much like the SPX chart. The dollar was flat overall, but this was composed of a general upward dollar (hence Gold down) but a notable strong rise in JPY, showing the markets are far from risk-on. Oil continued its rise.

Thursday February 25

The general mood we have seen all week and elevated prices trigged a sharp fall today with SPX down 2.5% and NDX losing 3.5% its worst day since October. The bond market also sold off with yields hitting a new 12m high of 1.6140%, in fact almost synchronously with equities, so not a flight from risk to fixed income, a flight to cash, as Gold also fell, and even Oil was only flat.

Friday February 26

There was some recovery today from yesterday’s sharp sell-off, with bond yields down 10bp and NDX up 0.6%, although DJIA and SPX were down. Much more action on USD which was sharply up following a sharp reverse in bond yields, down 10bp on the day. Gold was sharply down on the rising dollar, and Oil pulled back on the weaker equity position.


A second week of pullback, with NDX the biggest loser, down 4.94%. The largest forex mover was AUDUSD down 2.09% Cryptos continued to fall sharply after their super-rally, and FANGs broadly followed NDX down.

I was.a week too early last week with my AUDUSD sell. I made 0.34% on my EURGBP taking my total this year to a measly 0.58% with 6/8 wins. I will learn from my AUD mistake, and buy EURGBP again.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

  • New Month
  • Trend is down
  • RBA Rate Decision
  • Canada, Australia GDP

Mon Mar 1

A new month with five Markit Manufacturing PMIs, speeches from Fed Williams and Brainard, and ECB De Guindos, and President Lagarde at 1610, although this is only a pre-recorded event for German SMEs.

00:00 Aus TD Securities Inflation

01:45 China Caixin Mfr PMI(Feb)

08:55 Germany Markit Mfr PMI(Feb)

09:30 UK Markit Mfr PMI(Feb)

13:00 Germany CPI (e1.6% p1.6%)

13:30 Canada Current Account(Q4)

14:30 Canada Markit Mfr PMI(Feb)

14:45 US Markit Mfr PMI(Feb)

15:00 ISM Mfr PMI (e58.9 p58.7)

23:30 Japan Jobs/Unemployment Rate(Jan)

Tue Mar 2

Another heavy data day, and CB speeches from ECB Panetta and Fed Brainard again.

03:30 RBA Rate Decision/Statement (e0.1% hold)

07:00 Germany Retail Sales (YoY e5.0% p1.5%)

08:55 Germany Unemployment Rate/Change(Jan)

10:00 Eurozone CPI (Core YoY e1.1% p1.4%)

13:30 Canada Q4 GDP Final (QoQ e47.6% p40.5%) 

22:00 Aus Commonwealth Bank Svcs PMI(Feb)

Wednesday March 3

The data keeps on coming. Four ECB speeches today: Weidmann, Panetta, De Guindos and Schabel.

00:30 Australia Q4 GDP Final (QoQ e2.5% p3.3%)

01:45 China Caixin Svcs PMI(Feb)

08:55 Germany Markit PMI Composite(Feb)

09:00 Eurozone Markit PMI Composite(Feb)

13:15 US ADP Employment Change (e168k p174k)

14:45 US Markit Svcs PMI(Feb)

14:45 US Markit PMI Composite(Feb)

15:00 ISM Svcs PMI (e58.7 p58.7)

19:00 Fed Beige Book

Thursday March 4

Key today is the US Initial and Continuing Jobless Claims. Chair Powell speaks at the Wall Street Journal Jobs Summit.

00:30 Aus Imports/Exports/TB (TB e6.5B, p6.78B)

00:30 Aus Retail Sales (MoM e0.6%, p0.6%)

09:00 Eurozone Economic Bulletin

10:00 Eurozone Retail Sales (YoY e-1.3%, p0.6%)

10:00 Eurozone Unemployment Rate(Jan)

13:30 US Jobless Claims

15:00 US Factory Orders (MoM)(Jan)

17:05 Fed Chair Powell speech

Friday March 5

First Friday so it’s NFP day with little else on the calendar.

07:00 Germany Factory Orders s.a. (MoM)(Jan)

13:30 US NFP/AHE/UnEmp (NFP e148k p49k)

13:30 US Trade Balance(Jan)

15:00 Canada Ivey PMI

Sunday 21 February 2021

Week to Feb 19th

NKY 30-year high, Yields 12 month high, New US ATHs

This week President Biden said he would ‘go big’ on COVID stimulus, and the vaccine rollout continued without problems. Stocks soared again, with NKY hitting 30,000 for the first time in 30 years. However, by mid-week, the 10-year yield hit a one-year high, and the dollar followed it upwards. The Fed saying inflation risks were “weighted to the downside”, which put a damper on already overheated stocks (SPX is up 20% since the election) and the dollar, resulting in a flat week for DXY. GBP hit 1.40 for the first time since April 2018 and Gold made a 7-month low. Nevertheless, despite the first 3-day losing streak of 2021, DJIA only moved 0.11% the entire week, DXY only 0.16% and Oil 0.65%, so consolidation rather than collapse.

Next week is the final week of February, and the main highlight the Semiannual  Monetary Policy Report to Congress by Fed Chair Powell, known as the Humphrey-Hawkins testimony named after the two senators who introduce the Act of Congress mandating the report.

Mon Feb 15

Futures were flat today as US markets remained closed. Europe was positive with FTSE rising 2.5% and DAX 0.42%.. NKY broke the 30,000 barrier for the first time in 30 years. The dollar was down very slightly, and Oil was slightly up in line. Gold was flat on the day.

Tuesday February 16

Markets briefly made new highs today before pulling back, although from a cash point of view (ignoring Monday) they were up, and bonds (yields up 7bp), Gold and JPY were sharply and noticeably down line. The dollar reflected this, up across the board. Oil was up in line.

Wednesday February 17

Markets fell further today, as bonds and JPY recovered (although Gold did not, driven down by a strong risk-off mood, as seen in NDX dropping 0.6% against a flat SPX. The drop was particularly sharp after the Fed minutes at 1900 as is often the case. USD and Oil also fell on the Fed minutes, and continued to so for the rest of the week.

Thursday February 18

A sign that the market euphoria has probably topped is that today saw the first three-day losing streak of 2021. All equity markets and Oil were down. The dollar pulled back after its two day rising streak, and of course after the Fed comments. Gold and bonds were flat.

Friday February 19

Markets attempted to rally today but pulled back into the close (leaving Europe green) with NDX underperforming, and Oil down and Gold up in line. The US 10-year yield was up 7bp again to a new 12-month high. All in all a consolidating week, for example DJIA only moved 0.11% the entire week, DXY only 0.16% and Oil 0.65%


A flattish week for indices, with NKY at 1.69% the best performer. The strongest pair was AUDJPY up 2.10%. Bitcoin continued to go stratospheric, hitting new highs. FANGS notably underperformed NDX as a whole.

My AUDUSD sell was a disaster, losing 1.43% and wiping out most of my profit for the year. The running total is a mere 0.24% with 5/7 wins. This week I am betting that as EURGBP is the most oversold since Mar 2015, it will bounce back. Therefore I am buying EURGBP.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

  • Final week of February
  • Powell Humphrey-Hawkins testimony
  • Heavy CB speaker roster
  • US GDP second reading

Monday February 22

Not much news, but we have important speeches from UK Prime Minister Boris Johnson and ECB President Lagarde.

02:00 PBoC Interest Rate Decision (time approx.)

09:00 Germany IFO Sentiment

11:00 UK Prime Minister Boris Johnson speech

13:30 Chicago Fed National Activity Index (Jan)

13:45 ECB President Lagarde speech

20:30 Fed Bowman speech

Tuesday February 23

Today, Chair Powell gives his twice-yearly MPC report to the Senate. Otherwise US news is light.

07:00 UK UnEmp/Claimant Count/AHE (UE e5.1% p5%)

10:00 Eurozone CPI

14:00 US Housing/Home Price Indices

15:00 US Consumer Confidence(Feb)

15:00 Fed Chair Powell H-H Testimony to the Senate

17:30 BoC Governor Macklem speech

Wednesday February 24

As well as the Powell testimony, there are speeches today from Fed Brainard and Clarida.

00:30 Aus Wage Price Index

07:00 Germany GDP

15:00 Fed Chair Powell H-H Testimony to the House

15:00 US New Home Sales

Thursday February 25

EU leaders start a two-day (online) summit today to discuss COVID and their responses. Given that the EU is well behind many other countries, we might actually see some action. There is a press conference at 1700. Today is also the busiest day of the week for macro news.

00:00 EU leaders summit

07:00 Germany Gfk Consumer Confidence

10:00 Eurozone Consumer Confidence/Business Climate

10:45 ECB Lane speech

13:30 US Core PCE (QoQ)

13:30 US Jobless Claims

13:30 US Q4 Prelim GDP (e4.1% p4.0%)

13:30 US Durable/ND Capital Goods Orders (DG e1.1% p0.5%)

15:00 US Pending Home Sales (MoM)(Jan)

20:00 Fed Williams speech

23:30 Tokyo CPI

23:50 Japan Retail Sales/Ind Production

Friday February 26

The last trading day of the month may bring additional volatility, otherwise news is light.

00:00 EU leaders summit

13:30 US Core PCE (MoM and YoY)

14:45 Chicago PMI

15:00 Michigan CSI

Saturday 13 February 2021

Week to Feb 12th

Chinese New Year, Draghi new Italian PM, Trump acquitted

In a week which perhaps fittingly saw the start of the Chinese New Year of the Bull, indices, yields and Oil remained strong in defiance of the previous Friday’s NFP miss, while the VIX traded below 20 for the first time since February 2020. And yet the Dollar reversed all week on lower expectations of a Fed rate hike and rising inflation pushing real rates further into the red even though CPI missed expectations with a print of 1.4%. Tesla's announcement that it has bought $1.5bn in Bitcoin raised questions of corporate speculation and even though they have made more profit on this bet than from selling cars, the stock is lower on the week. US politics were again in the news with Trump's impeachment trial proceeding and Biden's first phone call with Xi demonstrating relations could remain tense.   

Mon Feb 8

Over the weekend, TreasSec Yellen urged Congress to pass the stimulus package, and there was no letup in last week’s rally, with SPX up 0.7% and NDX up 1%. Oil was up in line. Hopes that respected ex-ECB President Mario Draghi could form a government in Italy boosted Italy’s MIB 1.5% on top of last weeks 7% gain. The safe haven dollar sold off against all currencies and Gold. Bonds were flat on the day.

Tue Feb 9

Stocks snapped a six-day run, and took a breather today, although NDX eked out a 0.1% gain. There was no particular news, just probably some profit-taking, and the NDX outperformance shows the mood was still risk-on, as reflected by a further move out of USD across the board (Gold was also up), and Oil still rising. Bonds were slightly up.

Wednesday February 10

Missing on Chinese and US inflation figures were followed (after a gap up to a new ATH) by a sharp 1% drop at the US open today, although the main index largely recovered with SPX down 0.1%. However NDX fell 0.3%. The dollar was flat today, so Gold followed risk instead and rose, along with bonds and JPY. Oil was slightly up, ignoring the equity move.

Thursday February 11

Markets were up again today after a positive jobs report, although it was an inside day, they did not reach Wednesday’s high. Nevertheless, with NDX outperforming and Gold, bonds and JPY falling, it could just about be called a risk-on day. The dollar was again flat bouncing off the 90.30 low. Oil pulled back after several days of rallying.

Friday February 12

Vaccine progress and stimulus hopes produced a late strong rally pushed SPX and NDX up 0.5% to new ATHs. Oil was up, and Gold, bonds and JPY were down in line. The dollar turned back up earlier in the day, although that faded as stock rallied.


A strong week for equities, although nowhere near as strong as last week. The strongest performer by far was NKY. AUD continued to rally, and AUDUSD was the strongest performer up 1.07%. Bitcoin rallies to new all-time highs. FANGS were variable, but hardly different from the indices as a whole.

My second AUDNZD long paid off, up 0.57% making my running total +1.67% with 5/6 wins. I think the dollar will recover more next week, and AUD may take a breather. I will therefore sell AUDUSD

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

  • FOMC Minutes
  • Retail earnings phase starts
  • OpEx week
  • Heavy industrial data

Monday, February 15

Over the weekend, as expected, Trump was acquitted in impeachment and Mario Draghi was appointed Prime Minister of Italy. There is a Eurogroup meeting all day. Markets are closed in the US for Presidents Day , and in Canada and Hong Kong. Markets remain closed in China until Thursday for New Year.

23:50 Japan Q4 Prelim GDP (QoQ e2.3% p5.3%) (Sunday)

04:30 Industrial Production (YoY)(Dec)

10:00 Industrial Production s.a. (MoM)(Dec)

Tuesday February 16

There is an EcoFin meeting all day. No significant US news

00:30 RBA MPC Minutes

03:00 China Imports/Exports/TB (time approx.)

10:00 Eurozone ZEW Survey – Economic Sentiment(Feb)

10:00 Eurozone Q4 Prelim GDP (QoQ e-0.7% p-0.7%)

10:00 Germany ZEW Economic Sentiment(Feb)

23:30 Aus Westpac Leading Index (MoM)(Jan)

23:50 Japan Imports/Exports/TB

Wednesday February 17

The key day of the week with US Retail Sales and the FOMC Minutes.

01:00 RBA Kent speech

07:00 UK CPI (YoY e0.5% p0.6%)

13:30 US Retail Sales (Control Group e0.4% p-1.9%)

13:30 Canada BoC CPI (Core p1.5%)

16:00 BoE Ramsden speech

19:00 FOMC Minutes

Thursday February 18

Retail giant and DJIA component WMT kicks off the retail phase of earnings season. There are rate decisions in Turkey and Indonesia.

00:30 Aus NFP/UnEmp (NFP e50k p50k, UE e6.5% p6.6%))

11:00 BoE Saunders speech

12:30 ECB MPC Minutes

13:30 US Building Permits/Housing Starts (MoM)(Jan)

13:30 US Jobless Claims(Feb 5)

13:30 Philly Fed Mfr Survey(Feb)

15:00 Eurozone Consumer Confidence(Feb) Prel

22:00 Aus Commonwealth Bank PMIs

23:30 Japan National CPI

Friday February 19

Markit PMIs in all three groups (manufacturing, services and composite) are released today for Germany, Eurozone, the UK and the US. Today is OpEx day, so expect additional volatility.

00:30 Aus Retail Sales (e2.0% p-4.1%)

07:00 UK Retail Sales

08:30 Germany Markit PMIs (Mfr e56.5 p57.1)

09:00 Eurozone Markit PMIs (Comp e48.1 p47.8)

09:00 UK Markit PMIs (Services e40.5 p39.5)

13:30 Canada Retail Sales (e0.1% p1.3%)

14:45 US Markit PMIs

Sunday 7 February 2021

Week to Feb 5th

Best week since November, Dollar breakout, Gamestop ‘game over’

In a week which saw the vaccine rollout continue without a hitch, the collapse of the small trader inspired shot squeeze on GME, and a new Jobless Claims low, equity markets soared to new highs posting the best week since the election, with Oil rising in line and finally, Gold, Bonds and JPY smoothly fading in the risk-on environment. The dollar relinquished its safe haven status, and finally broke out to the doldrums to the upside, and we saw the first hint for months of hawkishness with the BoE dismissing for now the idea of negative rates.

Next week sees the start of the Chinese Year of the Ox, or Bull. Do not underestimate the sentimental value of this in China. There is a pause in earnings season before the retail phase, with only KO and DIS of note reporting. Otherwise, the calendar is light, with only inflation (US, China, Germany) on Wednesday of any significance.

Mon Feb 1

After last week’s pullback, markets recovered today on continued vaccine progress, and some bipartisan support for the stimulus package, and shrugged off the ISM PMI miss. SPX added 1.6% and risk-sensitive NDX outperformed. There may have been some rebuying for the new month. Oil was up in line. The VIX, however, stayed above 30, however, driven by the r/WallStreetBet saga, as GME fell 30%. Having sat in the 90-91 range for weeks, the dollar finally broke out and hit a 7-week high in a fairly even move against all currencies. Paradoxically, Gold ignored both equities and dollar and added nearly 1%. It does this sometimes, clearly bid all day. Bonds were flat on the day.

Tuesday February 2

A second day of rally for the same reasons, and with GME falling a further 60%, an institutional relief sentiment that ‘the mob’ cannot, in fact, break institutional positioning. Small investors collectively lost billions in this GME escapade, and the bulletin boards went quiet. Again Oil was up in line, but this time Gold pulled back as expected, and bonds were down, reflecting the risk-on mood. The dollar was flat on the day except against the antipodeans, which are not part of DXY, both 0.32% up on the RBA stimulus.

Wednesday February 3

News of our old friend Mario Draghi as the new Italian Prime Minister caused a lift in MIB and BTPs, but had little effect on the rest of the world, and SPX took a breather today, with very little volatility, and only slightly up. NDX underperformed and posted a red candle, despite a 7.3% rise in GOOGL after earnings the evening before. Similarly the dollar was quieter, moving less than 0.1% against any of the basket currencies. Gold and bonds were slightly down, but Oil was up for a third straight day.

Thursday February 4
Another day and the rally resumed, with indices posting new all-time highs, after the lowest Initial Jobless Claims since November. Oil was up, and all indices were positive except FTSE, after GBP shot up 1% in two hours after the BoE confirmed that there would be no negative interest rates anytime soon. UK yields rose on the news. Otherwise it was a strong day again for the dollar, which made a new 7-week high, pushing Gold down. Bonds were flat.

Friday February 5

The rally continued again today closing the best week since November. Also, after fully retracing, shares in GME rallied again by nearly 20% after Robinhood removed trading restrictions. After rallying all week the dollar came off sharply after the NFP miss and back into the consolidation range. Gold was up in line with the dollar move, and Oil and yields were up in line with equities.


The best week since October saw all indices rise, with risk-on index NDX marginally the best performer. EURAUD was the biggest forex mover, down 1.22%. Cryptos rallied hard with ETH hitting a new ATH. FANGs performed in line with NDX, except for GOOGL up a massive 14.31% also making a new ATH.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

  • Chinese New Year
  • Earnings Season Pause
  • China, Germany, US inflation
  • Thin US macro news

Monday February 8

As is often the case, a quiet Monday.

23:50 Japan Current Account (Sunday)

07:00 Germany Industrial Production

Tuesday February 9

Another day with no significant US news. Tech firms TWTR and CSCO report after the bell.

02:00 China Imports/Exports/TB

07:00 Germany TB

23:30 Aus Westpac Consumer Confidence

Wednesday February 10

The main news day of the week, with Chinese, German and US inflation. Dow staple KO reports before the bell. There is a rate decision in Sweden (SEK is 4.2% of DXY).

00:00 Aus HIA New Home Sales

01:30 China CPI (YoY p0.2%)

07:00 Germany CPI (YoY p1.6%)

13:30 US CPI (YoY e1.6% p1.6%)

16:30 BoC Lane speech

17:00 BoE Governor Bailey speech

19:00 US Monthly Budget Statement

Thursday February 11

Entertainment giant DIS report before the bell, with only a single significant news items. There are rate decisions in the Philippines and Mexico. Markets are closed today in China and remain closed until next Thursday, as the new Year of the Ox…or Bull. Hong Kong reopens on Tuesday. Markets are also closed in Japan for one day.

13:30 US Jobless Claims

Friday February 12

Focus is on the UK today with second GDP reading. There is a rate decision in Russia. 

07:00 UK Manufacturing/Industrial Production

07:00 UK Prelim Q4 GDP (e15.8% p16%)

10:00 Eurozone Industrial Production

15:00 Michigan Prelim CSI (p79)