In another week without notable news, markets fells but then recovered on the NFP beat. The dollar continued to recover from the 89.50 support low. Yields made new 2021 highs, as did Oil.
Mon Mar 1
Markets bounced back into the new month today, after the losses of last week with SPX adding 2.4% its biggest one-day gain in nine months, and NDX and RUT outperformed. Gold, bonds and yen were down in line. DXY was was up on the day, but only against EUR, it was down elsewhere, notably against CAD, perhaps a delayed response to strong Oil prices, although the black stuff actually fell today, albeit after a strong run,
Tue Mar 2
Stocks pulled back slightly today after Monday’s strong run. Positive sentiment about vaccines were weighted against fears of a bubble (voiced by China) and notably bubble-like stocks such as TSLA and ZM were hardest hit. NDX underperformed SPX as a whole. Gold, Bonds and JPY were up and Oil was down, all in line with the equity move. The 100% asset class correlation proves that the whole day was sentiment-driven.
Wednesday March 3
The other driven feature of this equity stall, the sharp rise in bond yields, continued today with US10Y adding 8bp on the day. Stocks fell again, with SPX down 1.3% and NDX down 2.7%. The dollar rose again, although not by much, but enough to depress Gold. Oil ignored the turmoil and bounced off $60 support (once resistance) and closed 2.7% up.
Thursday March 4
Jay Powell failed to give investors anything more today (all current stimulus/loosening is priced in) and SPX saw a 3.2% (NDX 3.8%) drop in two hours as the Fed Chair spoke, although it had been rising earlier and recovered some of this recovered into the close. The two indices closed 1.3% and 2.1% down.
The dollar shot up during the same period, as did bond yields. Gold fell in line with the dollar. Oil clearly also reacted to the dollar, spiking up in exactly the same way and adding 4.7% on the day. Perhaps we should ignore the link with equities and instead look at the dollar link on Oil.
Friday March 5
A surprise beat on NFP (279k vs 148k) was enough to cause a sharp rebound back up today, and erase Thursday’ losses completely. SPX rose 2.4%, its best day for nine moth, and NDX rose 3%. The dollar continued to rise, although yields paused and were flat on the day, as was Gold. There was no stopping Oil, which rose again to close 7.58% up on the week.
WEEKLY PRICE MOVEMENT
A whipsaw but ultimately flat week resulted in FTSE being the biggest mover, probably on the back of Oil. The top forex mover was CADJPY up 2.38%. Cryptos rose although not explosively as in previous weeks. FANGs were very variable although not far from the NDX norm.
A second week of buying EURGBP failed badly, and the 0.76% loss took us into a loss for the year, running total now -0.42% with 6/9 wins. The pair has decisively broken the Apr 20 support low, and should now fall, but but once bitten and all that. CADJPY’s move this week was overdone, and at 74.6 is at the highest RSI since April 2013. I am banking on some reversal and selling the pair.
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)
- ECB Week
- US and German Inflation
- Canadian Rate Decision
- Canadian NFP
Monday March 8
No US news today. Markets are closed in Russia.
05:00 Japan Leading Economic Index
07:00 Germany Industrial Production
10:00 BoE Governor Bailey speech
23:30 Japan Overall Household Spending
23:50 Japan Final Q4 GDP (e3% p3%)
Tuesday March 9
A second day without US news, or indeed much anywhere.
07:00 Germany TB
10:00 Eurozone Final Q4 GDP (e-5% p-5%)
22:00 RBA Governor Lowe speech
23:30 Aus Westpac Consumer Confidence
Wednesday March 10
Chinese and Canadian inflation, and a rate decision on CAD.
01:30 China CPI (e-0.4%, p-0.3%)
12:30 US CPI (Core YoY e1.4% p1.4%)
15:00 BoC Rate Decision/Statement (e0.25% p0.25%)
19:00 US Monthly Budget Statement
Thursday March 11
The ECB may give some indication on the rising German bond yields. Markets are closed in India.
00:00 Aus Consumer Inflation Expectations
12:45 ECB Rate Decision/Statement (e0% hold)
13:30 US Jobless Claims
13:30 ECB President Lagarde Presser
18:30 BoC Schembri speech
Friday March 12
Once again, news is more focused to Europe.
07:00 UK Mfr/Ind Production
07:00 UK Q4 Final GDP
07:00 Germany CPI (e1.6% p1.6%)
10:00 Eurozone Industrial Production
11:30 UK NIESR GDP Estimate (time approx.)
13:30 Canada NFP/AHE/UnEmp (UnEmp e9% p9.4%)
15:00 Michigan CSI (e78 p76.8)
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