Hot list selection of the week

[hot market]

In 2021, the first trading day, spot gold, showing high jump empty open on top of $1900 on Monday, then all the way up, the most high to $1959.16 on Wednesday during the plate, gold began to weaken, Wednesday evening two short line diving, gold has dropped back near 1910, gold prices fell slightly on Thursday, European early on Friday, gold flash crash nearly $25, briefly next break the $1880 level, then quickly rebound, non-agricultural data, gold again lost 1860 mark.

Spot silver, which has followed a similar pattern to gold this week, jumped to a high of 27.91 on Monday and then fell sharply. After trading sideways on Thursday, it fell more than 5 percent to $25.80 in early European trading on Friday.

This week, Democrats won control of the Senate, paving the way for more fiscal stimulus. Investors expect more fiscal stimulus to lead to a faster economic recovery, which would allow the Fed to reduce monetary stimulus sooner. The yield on the 10-year Treasury note surged this week, first above 1 percent and then briefly above 1.1 percent.

In the oil market, US and Brent crude rose during the sub-session on Monday, then fell back after the European session, and then continued to rise on Tuesday, with WTI crude above $51 and Brent above $55 / BBL. Oil prices were boosted mainly by news that Saudi Arabia had voluntarily cut output by 1 million b/d.

On the currency market, the dollar index fluctuated sharply this week, jumping low on Monday and then continued to fall lower in the evening, and then picking up in the evening. On Tuesday, the index moved sideways. On Wednesday, the index jumped low again and fell to 89.22 for a time, then fluctuated upward.

The pound did not surge against the dollar after the Brexit vote, but instead began to weaken, mainly due to the outbreak in the UK. GBPUSD rose slightly in the sub-session on Monday and then continued to dive in the European session, falling from above 1.37 to around 1.3550. The pound fluctuated higher on Tuesday, then weakened again late Wednesday before finally fluctuating lower and is still trading below the 1.36 mark.

EURUSD first rose and then fell, jumping to open high on Monday and then fluctuating upwards in the following two sessions to reach 1.2349. The pullback started late Wednesday and accelerated on Friday, falling as low as 1.2213, giving up all of the week’s gains.

Bitcoin experienced a brief pullback on Monday, dropping back below $28,000 at one point, but quickly started to rise again. After breaking out of the cross on Tuesday, it jumped higher for three consecutive trading days. On Friday, it broke through the $40,000 mark and rose to $41,802 at one point. It took Bitcoin nearly 20 days to go from $20,000 to $30,000, but it only took Bitcoin a week to go from $30,000 to $40,000. Bitcoin has risen more than $11,000 since 2021, pushing the total value of the cryptocurrency market above $1 trillion.

The Events of the Week

Saudi Arabia again volunteered to cut output by 1 million b/d and OPEC + agreed to a small increase in output from Russia

The OPEC + Ministerial Meeting held this week can be said to be a very tortuous one. On the first day of the meeting, divisions within OPEC + appeared again. Most of the OPEC + members opposed to further increase production in February, while Saudi Arabia, Iraq, the United Arab Emirates and other countries supported maintaining the scale of joint production cut in January until February. But Russian Deputy Prime Minister Novak refused to extend the current cut, proposing to cut it by another 500,000 b/d in February. As a result, the meeting was postponed for another day.

On Wednesday, Saudi Arabia made a surprise announcement that it would voluntarily slash output by 1 million barrels a day in February and March, while other OPEC + members held steady or increased output slightly. That would more than offset a combined increase of 75,000 b/d per month by Russia and Kazakhstan in February and March. OPEC + cut output by 7.125 million b/d in February and 7.05 million b/d in March.

Saudi Arabia’s move reflects its concern about the potential impact of a resurgence of the disease in Europe on global oil demand and underscores the kingdom’s determination to avoid a new price war with Russia.

US non-farm payrolls fell by 140,000 in December, the first negative reading since April last year

At 21:30 on Friday night, U.S. non-farm payrolls fell 140,000 in December on a seasonally adjusted basis, the first decline since April last year, versus expectations of a 71,000 increase and a 245,000 increase last month. The U.S. unemployment rate, released at the same time, rose to 6.7 percent in December, ending a seven-straight decline. The previous estimate was 6.7 percent and the market had expected 6.8 percent.

The U.S. ADP employment report, released late on Wednesday, came in at minus 123,000 in December, the first negative reading since April 2020.

Financial website MarketWatch commented that non-farm payrolls fell for the first time in nearly eight months as the outbreak hit the economy again and forced companies to cut more jobs. The U.S. economy is still missing about 10 million jobs that existed before the outbreak, and there is little hope of recovery any time soon.

Britain has imposed its strictest city closures since March last year

In terms of the epidemic, the UK continues to spread, the UK again introduced blockade measures. Mr. Johnson announced a lockdown across England from Monday night until mid-February to prevent a surge in new cases from overwhelming the national health system. Johnson announced the highest level of strict control across the UK from May 5 until mid-February, replacing the four, three and two controls currently in place in England to stop the rapid spread of the novel coronavirus virus.

According to foreign media, this is the strictest closure of a city in England since the first one was imposed last March.

In terms of vaccination, the U.S. has been slower than expected. White House Chief of Vaccines Moncef Slaui acknowledged Monday that the U.S. is lagging behind in vaccination efforts. As of Monday morning, 4.2 million people in the United States had received their first dose of Novel Coronavirus, and 13 million doses had been distributed, but the federal government had promised that 20 million people would get their first dose by the end of 2020. It has been two and a half weeks since the new crown vaccine was administered in the United States, which is slower than originally planned.

In an effort to speed up vaccination for Americans, the federal government is considering halving the dose of a new crown vaccine developed by Modena, an American biotech company.

Fed minutes reveal the conditions for adjusting QE

In the early hours of Thursday morning, the Fed released the minutes of its December 2020 monetary policy meeting. The minutes reiterated the Fed’s commitment to keep its bond-buying programme unchanged until “further material progress” is made towards achieving the Fed’s economic objectives.

Moreover, the minutes showed that asset purchases were leading to “very significant” policy easing. All participants agreed that the current pace of bond purchases was appropriate. However, several Fed officials are open to buying longer-dated bonds.

Ellen Zentener, Morgan Stanley’s chief economist, said there were some signs that the Fed appeared to be thinking about tapering its quantitative easing program. He think:

“Fed officials are more optimistic about the medium-term outlook for growth and inflation. For now, while maintaining the current policy, we are beginning to think about when and why the tapering of asset purchases will begin.”

In addition, on Thursday, the Fed announced on its website that it had returned $42 billion to the Treasury and would soon return an additional $20 billion.

[Risk alert for next week]

Investors will need to keep a close eye on speeches from Fed officials and European Central Bank President Christine Lagarde next week.

Tuesday: Atlanta Fed President Richard Bostick participates in an online discussion on the 2021 economic outlook; Fed Governor Lael Brainard is also scheduled to speak the same day.

Wednesday: ECB President Christine Lagarde speaks at the Reuters Next Summit.

Thursday: Fed Governor Lael Brainard speaks; Federal Reserve Vice Chairman Larry Clarida spoke about the Fed’s new framework for monetary policy.

Friday: Fed Chairman Colin Powell speaks at an online event at Princeton University; Atlanta Federal Reserve Bank President Richard Bostick.

On the data front, investors will focus next week on Friday’s U.S. retail sales for December, which are expected to show a minus 0.1 percent reading, a big improvement.

Also worth watching next week are several monthly oil market reports. On Wednesday, the EIA will release its monthly short-term energy outlook. Next Thursday, OPEC will release its monthly oil market report.