Market Commentary - February 10, 2021
Wall Street at a standstill on Tuesday as investors focus on Donald Trump’s second impeachment trial for inciting insurrection. Lawmakers debated for four hours beforehand to determine whether it was constitutionally correct to impeach an official who was no longer in office. The hearing began with prosecutors playing a 10-minute video including snippets of then President Trump suggesting to the crowds to march towards Congress and “fight like hell”. Meanwhile, reiterating Treasury Secretary Yellen’s stance, Richmond Fed President Tom Barkin told the Financial Times, Biden’s $1.9tn package would not destabilize long-term inflation and that he’s “keeping focus on medium-term expectations” instead.
Following a strong rally of recent days fuelled by Draghi’s appointment euphoria, European benchmarks retreated yesterday. The UK’s FTSE100 manage to etch out a 20-point gain on improving 2021 outlook after homebuilders revealed increasing demand. Australia’s S&P200 surged 0.5% on open, Hang Seng up 1.3% and the Nikkei recovers last sessions losses. The BOJ is expected to tweak in asset purchase program March to make it more sustainable and effective.
Bitcoin’s irrational exuberance ran its course retreating down to $46,000 after surging 10,400 points to $48,000 on the back of Tesla’s endorsement. A moment of clarity from Treasury experts illustrate an unlikely world where corporations would shift assets towards cryptocurrency. Especially the unpredictable volatility of the asset regardless of direction.
Elsewhere gold advances for three consecutive days to $1,838 on rising inflation expectations, whilst the U.S dollar continues to debase. Platinum breaks above $1,200 as supply tightens and demands surges from the global economic recovery. Ahead of inventory data today, crude oil’s upward momentum is unrelenting as it ends 7 consecutive days in bull territory.
Figure 1 (Source: IS Prime): Platinum Daily : Platinum surges past 1,200 upon realization the current pace of supply is insufficient to meet demand recovery.
Headliner to Review
- The number of job vacancies in the United States in December last year was unexpectedly increased by 74,000 on a monthly basis (the first decline in the previous three weeks was down to 60,000) to a total of 6.646 million (the previous total was revised up to 6.572 million), a record five Months high. It was still far below the 7 million before the pandemic in February last year. The market expected to continue to drop to 6.5 million.
- The US NFIB Small Business Confidence Index unexpectedly fell for the third consecutive month in January this year. The decline has slowed significantly from the previous value of 95.9 to 95, which is an eight-month low. The main reason is that companies have weakened expectations for future business conditions and short-term sales.
- The Westpac Consumer Confidence Index rose by 1.9% month-on-month to 109.1, reversing the previous value for the first time in five months. The pre-pandemic level in February was 14.2% higher.
Headliner to Watch
- Crude oil inventory expected to remain in deficit at -0.9M from -1.0M with demand surging as economies recover globally.
- Fed Chair Powell will speak online at the Economic Club largely expected to reiterate the Fed’s commitment to keep monetary policy accommodative.
- America is expected to post their 8th month of inflationary pressure at 0.3% with annual inflation at 1.6%. No doubt concerns of overshooting inflation target are a real concern at it’s currently. Once May 2020’s -0.8% drop off, figures could reach as high as 2.4%.
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Topics: Market Commentary