Another consolidating week, but with SPX and DJI hitting new highs, whilst rotation in an out of NDX continued daily. The key feature of the week was a more dovish than expected Fed, but this only cause a 24 hour blip. The most notable move was Oil which pulled back hard after weeks of rising.
Monday March 15
US DST started today. SPX and DJI made new all-time highs today, as US 10-year yields also touched a new 14-month high, all in line with an expected post-COVID world. However, risk returned in the form of NDX rotation. The tech index was up 1.12% vs 0.65% for SPX. The dollar was up in line with yields. Gold surprisingly rose slightly, and Oil was flat.
Tuesday March 16
A 20-year note auction saw strong demand, with the yield down at 2.29% The 30- and 10-year prices were flat. Equities were stalled today, with DJI and SPX fading, but again NDX outperformed, adding 0.53%, with strong FANG performance. The dollar, gold, and Oil were all flat, awaiting the Fed on Wednesday.
Wednesday March 17
Today’s Fed was more dovish than expected with Chair Powell repeating that “substantial” progress was still needed before any QE taper. DXY fell immediately 0.5% in an hour, and all indices rallied (but with NDX underperformance). Yields similarly spiked up. SPX and yields hit new all time and 14 month highs respectively. Gold spiked up on the weaker dollar, and Oil was flat.
Thursday March 18
As often happens after Fed day, there is a delayed reaction and the driver was the dollar. We know this because stocks and Gold both sold off, as the dollar quickly recovered its Fed spike down across the board (ie all currencies fell). Traders rotated out of NDX back into DJIA heavily, with NDX down 3.13%. FANG was in line with NDX, no more. After a sharp rise in EIA inventory, Oil followed equities sharply down, losing 7.64% from its elevated levels, dropping below $58.50 for the first time since Feb 12. It was the worst day for Oil since the April 20 ‘negative price’ fiasco. There was little volatility after the unsurprising BoE rate decision report.
Friday March 19
Triple witching OpEx day made for lively movement but only within a narrow range, and SPX closed flat. NDX once again notably outperformed DJIA by 1.32%. Oil recovered about half of yesterday’s sharp drop. Despite all this, against a flat dollar, gold rose. Bonds fell in line with the equity move.
WEEKLY PRICE MOVEMENT
Another consolidating week where most instruments ended up somewhere in last week’s range, showing by the fact that the biggest index move (DAX) was a modest 0.82%. The top forex mover was GBPJPY down a moderate 0.43%. Crypto was similarly quiet, hardly moving at all, as were FANGs except for FB which shot up.
Another losing week, but only by 0.06% on USDJPY, my running total for the year is now -2.35% with 6/11 wins. I am changing tack now and this week I will sell GBPUSD
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)
- Powell Testimony to Congress
- Heavy CB schedule
- Markit PMIs
- Light US data
Monday March 22
Final full week of the month. As well as Chair Powell on digital innovation, we have Fed speeches from Daly, Quarles and Bowman, and ECB Weidmann.
01:30 PBoC Interest Rate Decision (e3.85% hold)
12:30 Chicago Fed National Activity Index
13:00 Fed Chair Powell speech
Tuesday March 23
Fed Chair Powell testifies before the House today on the Coronavirus Act. Also we have Fed speakers Brainard (twice) and Williams, BoE Cunliffe and BoC Gravelle.
07:00 UK UnEmp/AHE (UnEmp e5.2% p5.1%)
11:50 BoE Governor Bailey speech
14:00 US New Home Sales
16:00 Fed Chair Powell testifies
22:00 Aus Commonwealth Bank PMIs
23:50 BoJ MPC Minutes
Wednesday March 24
Today’s Powell testimony moves to the Senate. Also Fed Williams speaks at 1735. A raft of European PMIs come in the European morning.
07:00 UK CPI (YoY e0.8% p0.8%)
08:30 Germany Markit Prelim PMIs (Mfr e51.8 p 51.1)
09:00 Eurozone Markit Prelim PMIs (Composite e49.1 p48.8)
09:30 UK Markit Prelim PMIs (Services e51.0 p49.5)
12:30 Durable/ND Capital Goods (NDC e1.0% p3.4%)
13:45 US Markit Prelim PMIs
14:00 Fed's Chair Powell testifies
15:00 Eurozone Consumer Confidence
Thursday March 25
There is a European Council Meeting all day. Fed Clarida and Williams speak, as does BoE Governor Bailey for the second time this week.
07:00 Germany Gfk Consumer Confidence Survey(Apr)
09:00 Eurozone Economic Bulletin
09:30 Fed's Williams speech
09:30 BoE's Governor Bailey speech
12:30 US PCE (QoQ)
12:30 US Jobless Claims
12:30 US Q4 GDP Annualised (e4.1% p4.1%)
23:50 Tokyo CPI
Friday March 26
The European Council Meeting continues for a second day. News is light.
07:00 UK Retail Sales
09:00 Germany IFO – Business Climate/Expectations
12:30 US PCE MoM and YoY
14:00 Michigan CSI
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