Ten-year U.S. bond yields are hovering at high levels. First, let’s take a look at the U.S. bond yields. Since last week, the ten-year U.S. bond yield has risen and then fallen, before spiking above 1.77% before falling back slightly and now oscillating in a narrow range around 1.7%.
Since this year, President Joe Biden has been mulling over his long-term economic stimulus bill. The bill is divided into two parts. One is the American Jobs Plan, which is often referred to as the infrastructure plan. The other is the American Family Plan.
Not unlike previous government funding, this stimulus bill will be funded by tax dollars. Last week, Biden announced specific details on the infrastructure plan. And this tax plan includes raising corporate income and capital gains taxes, overseas income tax rates, and raising the Social Security income cap, among others. And another stimulus plan will also be announced this month. The market expects that the two components will bring the total size of the stimulus to $3-4 trillion.
Inflation concerns brought about by the stimulus plan once made U.S. bond yields soar. However, considering that the current stimulus plan is still a long way from landing, and that there may be bipartisan differences on issues such as taxes, the market is still in a wait-and-see mode, so U.S. bond yields did not continue to soar.
However, the U.S. non-farm payrolls data released on Friday supported a handful of U.S. bond yields. The U.S. non-farm payrolls increased by 916,000 in March, the largest increase since August last year, greatly exceeding expectations. This indicates that the U.S. economy’s ability to recover as a whole is improving, although we still need to be wary of another outbreak of the epidemic.
The US index fell back below the 93 mark. The positive performance of non-farm payrolls also boosted the dollar index. However, the U.S. stock market rose to a new record high along with a good performance of the U.S. services PMI in March. The dollar index came under sharp pressure yesterday, falling below the 93 mark.
Gold oscillated in a narrow range around $1730. Moving on to gold. Currently U.S. bond yields and the U.S. dollar are still important factors influencing gold’s movement. Some time before last week, due to the steady strength of U.S. bond yields and the dollar, gold prices once fell to near $1677, then recovered lost ground and returned to near $1730.
Silver returned to the $25 mark. Silver moved in a roughly similar fashion to gold. Silver once fell to $23.7, but has now returned to the $25 mark.
The euro regained previously lost ground. Let’s look at non-U.S. currencies again. The euro remains trapped by the European epidemic, with news of embargo measures announced in France, Italy and other countries last week, at one point sending the euro narrowly below the 1.17 mark against the dollar. However, the dollar has been under pressure to the downside in recent days, supporting the pair’s return above 1.18.
The British pound shook higher. Then turn your attention to the British pound. The UK got a head start on the vaccination process, keeping the pound in the driver’s seat, and the pound oscillated upward against the dollar, breaking strongly above the 1.39 handle.
U.S. oil saw a big drop. Finally, take a look at the oil market. In recent times, U.S. oil has been more volatile, and yesterday was a sharp and wild fall.
The risk of an epidemic in Europe has dimmed the outlook for demand. As EU countries struggle to contain the spread of the new crown outbreak, the UK warned that foreign travel restrictions may continue after May 17. This comes as the top three economies in the Eurozone – Germany, France and Italy – have tightened their anti-epidemic restrictions.
On top of that, India, the world’s third-largest oil importer and consumer, is facing an out-of-control outbreak. In May, Indian state-owned refiners may have purchased 36% less oil from Saudi Arabia than normal, sources said.
On top of that, we have to keep an eye on U.S.-Iranian relations. The United States, Iran and other countries will start discussions on Tuesday. The market expects that the easing of US-Iranian tensions will lead to an increase in oil supply from Iran.
Against the backdrop of OPEC+’s decision to gradually slow down the pace of production cuts in May-July, the epidemic backlash in Europe and India, coupled with the expected increase in Iranian oil exports, crude oil saw a big drop.
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