The Market Week – January Week 2
- Markets remain underpinned by the political fallout from the extraordinary events in the Capitol building last week. Democrats have moved to impeach the President again as the cabinet will not act to remove him. Hugely symbolic event for the USA. Biden/Harris take the oath in less than a week.
- Nonfarm Payroll and ADP private payrolls both turned negative for December (-140,00 and -123,000 respectively). Weekly claims were marginally better than expected but remain elevated and close to 800,000 as unemployment holds at 6.7%.
- The vaccine rollouts are gaining traction globally, news that has helped to lift sentiment as the pandemic and lockdowns continue to grow as the new variant proves very contagious. There have now been more than 90.0m confirmed cases and over 1.93m people are known to have died.
- This week the USDIndex bounced from 33-month lows at 89.15 to peak at 90.50 before turning lower again amidst the political uncertainty. EURUSD moved down to 1.2135 before recovering 1.2200. USDJPY peaked at 104.35 before moving under 104.00 again and Cable slipped to 1.3500, before once again testing 1.3700.
- Global stock markets again posted new all-time highs, the USA500 peaked at 3830 and holds around 3800. Positive vaccine news and expectations of more fiscal stimulus from the US continue to support investor sentiment.
- The Gold price dipped as the USD moved higher, and then recovered to $1850 this week, as talk of inflation rise continues to swirl. However, it is Bitcoin that remains the asset on “Bid” as it broke over $41,000 for the first time; only to lose over 20% on Monday before recovering to $35,000. Volatility continues to follow the crypto market space.
- USOil prices continue to rally and this week’s private inventories showed a big drawdown and boasted prices close to $54.00 a barrel. Prices are supported by increased positive sentiment, but pandemic pressures and volatile inventories could limit the upside.
- The yield on the US 10-Year Treasury Note, having broken the key psychological 1.00 level last week, rallied to strongly to test 1.1800 before dipping to 1.1300. The anticipation of a larger US stimulus package record high stock markets and the weaker US Dollar is keeping yields bid and Treasury demand weaker.
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Stuart Cowell
Head Market Analyst
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