The Market Week – April – Week 2
The focus of attention this week moved from Bonds to Inflation data as the US CPI beat expectations, driving stock markets higher and the USD and yields lower. Retail Sales tomorrow could be significant, Earnings Season kicks-off in earnest today and China are due to report a possible GDP blow-out figure on Friday.
Unemployment remains stubbornly high globally and last week’s unemployment claims missed again, holding significantly over 700,000 at 744,000. This week consensus is for a possible breach of the 700,000 level.
The vaccine rollouts continue to drive sentiment, with the US and UK leading the high-income countries, and the EU and Japan still far behind. India and Brazil remain key infection hotspots as data emerged that shows the wealthiest 27 countries have 40% of the vaccine supply, despite the fact they only have 11% of the global population.
This week FX volatility continued as the USD further reversed its March gains. The USDIndex fell from 92.50, below 92.00, to test the 91.50 zone. EURUSD moved over and held over 1.1900 to test the 50-day moving average at 1.1965. USDJPY moved lower, testing under 109.00, and Cable moved up from a test of 1.3660 back to the mid-1.3700s.
Global stock markets continued the rotation from high growth technology stocks to financials, energies, and industrials ahead of Q1 Earnings Season. Yet again this week, all three key US markets posted all-time highs. The USA100 trades over 14,000, the USA30 over 33,500 and the USA500 over 4,140.
The Gold price declined from the rally to $1758, unable to hold the break over $1745, but as the USD and yields cool it has consolidated around $1740. Bitcoin broke higher this week, breaching the $60,000 level to post new all-time highs over $64,000. The imminent IPO of Coinbase is lifting cryptocurrency sentiment; Reuters dubbed it the “latest step in crypto’s march to the mainstream”.
USOil prices consolidated around $60.00 a barrel as the consequences of the OPEC+ production increases weigh, balanced by the improving economic outlook as forecast by the IMF last week and improving economic dataflow.
The yield on the US 10-Year Treasury Note holds above the psychological 1.50% level but has retraced to test the 1.60% level. This week’s auction saw better than expected demand for the key treasury note as it settled at 1.68%.
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Stuart Cowell
Head Market Analyst
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