market sentiment is aversion to risk. News that Germany has extended
containment measures for another month is hurting Europe on Tuesday.
remained stable in Asia after increased risk-taking prompted a fall in Treasury
yields, countering fears about the rise in Covid-19 cases and new lockdowns in
the higher-maturity Treasurys continued to fall in Asia after recording the
biggest decline in weeks on Monday. However, many investors predict that bond
yields will continue to rise as the U.S. economy recovers.
As the U.S. inflation data indicated as much as 2.8% of growth in the producer price index (PPI) last Friday, which is the highest value since November 2018, some part of the market seem to be mystified by the possible backlash by the Federal Reserve (Fed) at its latest regular meeting. The results of Fed's own monetary policy's audit will be represented to the market at 18.00 GMT, and the press conference with the U.S. regulator's Chairman Jerome Powell will follow half an hour later.
This possible increase in inflation could be due to the intense work of the U.S.
Brent oil prices spiked above $71/bbl in early Asian hours on Monday, March 8. The factor that played a role in this outcome is most probably fears around supply disruption from Saudi Arabia, after another combined drone and missile attack on some of its facilities by Yemen-based forces over the weekend. After these fears quickly faded, quotes were seen to go back to normal within the next two working days and now more adequate levels below $68/bbl can be seen. The morning low in European time on Wednesday was near $66.7/bbl, where the oil market found at least an intraday support.
The U.S. Dollar has overturned the consensus idea of the weakening Greenback that seemed to capture investors’ minds in the financial market. Negative factors that pressured the American currency before suddenly turned to a positive upside are discussed below.
The loose monetary policy of the Federal Reserve (Fed) and a new fiscal stimulus package of $1.9 trillion should, in theory, increase the supply of Dollars and this should eventually lead to a weaker Greenback. It is expected that neither the Fed nor the U.S.
As China's industrial activity data failed to inspire the investment community at the beginning of the week, with the Manufacturing Purchasing Managers Index (PMI) at 50.6 only against the estimated 51.1 level by the average Reuters poll's forecast and after topping at 52.1 peak in November 2020, a similar set of indicators in the EU were much more pleasant in market's eyes. Therefore, the European stock indexes have got a real chance to grow faster than their Asian and American competitors, attracting potentially more capital inflows into portfolios consisting of Old World's companies.
Crude prices are highly dependent on risk appetite and business activity expectations. Such expectations may be an explanation of the rally in crude prices, stock indices and other risky assets in the recent weeks. However, crude prices rally is rather more emotional and was not supported by strong fundamentals.
In February, OPEC estimated daily crude demand up by 5.6 million barrels per day in 2021 after it tumbled by roughly 10 million bpd in 2020. Meanwhile crude prices are already at those levels of early 2020 demand with Brent crude at $63-65 per barrel.
Some arcade-type episodes of corrective price adjustments on big tech giants like Amazon and Netflix are targeted but local sell-offs on some particular retail assets looks more like the result or sum of money management efforts taken by the market crowd. Individual investors and funds are trying to do it in a smart way by shedding particular shares which they have decided are too expensive to hold.
The stocks of Walmart Inc, which is the biggest retail corporation in North America, are nervously awaiting for tomorrow's Q4 earnings report. Its revenue and equity per share (EPS) figures are scheduled to be released before the Wall Street's open on Thursday, February 18, as well as the CEO's letter containing the forward guidance on the company's business plan and prospects for the rest of the year. Walmart operates a chain of budget hypermarkets, discount department and grocery stores with a very simple motto “Save Money, Live Better”.
Traditionally one of the major indicators for how the U.S. Dollar may move is the movement in U.S. Treasuries, but the connection between the two has been seen to weaken lately.
Such a correlation between the two is evident as Treasuries are a “Gold standard” for safe haven bonds with an ultimate security level. Any investments in Treasuries could be compared with having cash in your hands. So, any rise of Treasuries’ yields that enable for the creation of additional profits without any seeming risks could ignite additional demand for the Greenback and that could lead to its strengthening.
The U.S. stock market is closed this Monday because of Presidents' Day, while the whole of China celebrates its Lunar New Year vacations. By the way, the Year of the Metal Ox or Bull begun on February 12. The Chinese hieroglyphic symbol 牛 is attributed to the very same Bull, and it is pronounced similar to "niu" in English transliteration, which in turn sounds similar to "new". Even the intonation of the sound is phonetically similar to the ascending tone of the word "new" in the "new year" combination.