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Spot Gold due to soaring U.S. bond yields, from Tuesday this week, continued to fall, Tuesday once fell nearly $ 35 below the 1790 mark, Wednesday in the “scary data” before the release of the 1780 mark, Thursday once lost $ 1770, Friday after the U.S. market once on the 1790 mark and then back down, and finally closed at 1780 The upper side.
Spot silver fell less than gold, Tuesday once below the $ 27 mark, Wednesday managed to close up, the trend and gold divergence, Thursday struggling near $ 27, barely holding the mark, Friday nearly lost the $ 26 mark, but finally managed to close above $ 27.
In the oil market, extreme cold weather in Texas led to an energy crisis in the U.S. WTI crude surged more than 2% to a new high of more than a year on Monday, closing above $60. News of a possible Saudi production increase on Wednesday brought brief panic to the market, but the two oils closed sharply higher by more than 2% as U.S. production plummeted, with WTI crude returning above the $61 mark and Brewer oil approaching $65 per barrel. The threat of cold snap disruptions in Texas showed signs of easing on Thursday, with crude turning lower intraday and falling away from the 13-month highs that have continued to hover recently, with both oils closing down more than 2%. Oil prices have continued to come under pressure so far on Friday.
In the currency market, the U.S. index on Wednesday once above the 91 mark, the 10-year U.S. bond yield twice on the day touched 1.33%, the U.S. index from Thursday to maintain the downturn, due to poor initial claims data, the U.S. index hit the largest decline in 10 days, closing down 0.42%, down to 90.57, down from the three-week high, suspending the two-day streak. Friday the pound and the euro rose significantly, the U.S. index continued to retreat.
The British pound was a strong performer against the U.S. dollar, standing at the 1.39 handle on Monday and posting its biggest gain in more than a month on Wednesday, trading near a nearly three-year high on Thursday, up 0.8%, rising to an intraday high of 1.3986 since April 2018 and hitting 1.40 for the first Time in nearly three years on Friday, boosted mainly by the U.K.’s aggressive push for a mass vaccination program, though overnight gains narrowed and fell back to 1.40 However, overnight gains narrowed to below 1.40.
In the stock market, the first three trading days of the U.S. stocks performance shocks, Thursday by the initial claims data dragged the three major indices are the largest closing decline in the past three weeks, Friday the three major indices divergence, the S&P 500 continued to close lower, the Nasdaq and the Dow rose slightly.
European stocks fell this week, the European Stoxx 600 index closed on Monday to a new high since February 21 last year, but Wednesday and Thursday for two consecutive days since January 29 the biggest closing losses, Germany, Britain, Italy, Western stocks are down for three days in a row, French stocks fell for two days.
Bitcoin had a volatile week, with a pullback of nearly $3,000 on Tuesday to near $48,000, breaking the $52,000 mark on Wednesday to hit a new all-time high, but falling more than $1,700 from its record high on Thursday, before resuming its rally from Friday to Saturday and even hitting a new all-time high of $56,500.
[Weekly Events
①The U.S. Texas outbreak of deadly cold wave, Crude Oil production disruption
The unprecedented cold weather and massive power outages disrupted the state’s crude oil production and refining, thus driving new buying of crude oil and pushing prices to a new high in more than a year.
Texas is Home to the Port Arthur refinery, the largest refinery in the United States, producing about 4.6 million barrels of oil a day, or about 40 percent of the nation’s output, while the state produces about a quarter of the nation’s natural gas. Crude oil processing capacity fell by about 5.5 million barrels per day under the blizzard, said Amrita Sen, chief oil analyst at consulting firm Energy Aspects Ltd. As one of the world’s largest oil fields, the Permian Basin accounts for more than a quarter of the total U.S. oil supply, and its current operating capacity is well below half of its normal capacity.
Oil and gas transportation capacity has also been limited by the bitter cold, as power outages have disrupted the crude oil pipeline from Illinois to the Cushing, Oklahoma, area, which has a capacity of 585,000 bpd and is the largest oil storage center in the United States.
Today some Texas shale oil producers are trying to slowly restart their wells, but resuming production is difficult. The four largest refineries in Texas expect it could take weeks for them to recover from the freeze damage.
The snowstorm and severe cold weather in the United States will continue for several days. According to the “Winter Storm Warning” issued by the U.S. National Weather Service, the U.S. local time after February 17 will also usher in a winter storm, will successively affect the southern, Midwestern and Northeastern states, cold weather and icy road conditions are expected to last for several days. The affected population is about 115 million.
Citi expects to lose 16 million barrels of oil production by early March; up to 1 million barrels per day of production capacity may still be available in the Permian Basin in Texas over the next 10 days and will remain offline.
②Gold sold off as U.S. bond yields soar
TD Securities was one of the banks that changed its tune this Wednesday when it announced it was closing out its long positions after gold prices fell below $1,790 per ounce.
TD Securities also pointed out that there are still massive long positions in the gold market, and with bond yields rising, gold will likely continue to sell off and gold prices will continue to come under pressure to fall.
Also, according to 13F regulatory filings, BlackRock, the world’s largest custodian, is retreating from the gold market and moving into the silver market, selling 2.7 million shares of SPDR Gold Shares (GLD), the world’s largest gold ETF, in the fourth quarter of 2020, while buying 1.18 million shares of iShares Silver Trust (SLV), the world’s largest silver ETF.
In addition to BlackRock, Warren Buffett’s Berkshire Hathaway also disclosed in a 13F filing that it closed its position in gold stocks in the fourth quarter.
It is worth mentioning that according to foreign media reports, the volatility of U.S. Treasuries will become more intense next, with volatility markets suggesting that yields on benchmark bonds could spike or fall by nearly 30 basis points in the next three months. The next few months will be critical for the U.S. bond market, and investors should be prepared.
③ Bitcoin Breaks $56,000 as First Bitcoin ETF Hits Trading
Bitcoin broke through the $56,000 barrier this week, sparking renewed market buzz. Bitcoin is winning over more and more institutional money managers and could divert money from the gold market.
tesla‘s previous announcement of adding $1.5 billion of bitcoin to its balance sheet has been the most obvious catalyst in recent days. Tesla also said it will soon begin accepting payments for Tesla cars via Bitcoin.
Optimism grew again after Mastercard and Bank of New York Mellon Corp., the oldest bank in the U.S. and a major custody provider, moved to make cryptocurrencies more accessible to customers.
BlackRock, the world’s largest custodian, also announced it has begun to dip its toe into the bitcoin space.
U.S. business intelligence firm MicroStrategy announced that it expanded its planned convertible debt offering from $690 million to $900 million, with proceeds from the offering expected to be around $879 million, which will be used to buy more bitcoin.
Jeffrey Gundlach, CEO of DoubleLine Capital LP and a longtime gold long, has changed his mind about gold and sees bitcoin as a better trade.
The first bitcoin ETF, BTCC, was listed on the TSX on its first day of trading as the price of bitcoin reached another record high, with volume of 9.65 million shares worth $165 million, placing it in the top 10 of all varieties traded on the TSX that day.
④Likelihood of OPEC+ easing production cuts after April increases as Saudi Arabia reveals intention to increase production
OPEC+ sources said OPEC+ producers may ease restrictions on crude supply after April in light of a recovery in oil prices, though the easing will not be significant as producers remain wary of potential resistance setbacks, possibly for an increase of 500,000 bpd.
Also according to the Wall Street Journal, Saudi Arabia will boost oil production as oil prices rebound, with plans to increase production in the coming months to reverse January’s big cut and increase production by as much as 1 million barrels of oil a day.
With oil prices continuing to rise recently, Saudi Arabia plans to announce its decision to stop additional production cuts at a meeting of oil producers next month, but will wait until April to start increasing production, the sources said. But advisers warned that the plan could still be overturned if conditions change and that Saudi Arabia’s intentions have not been communicated to the Organization of the Petroleum Exporting Countries.
OPEC representatives said OPEC+ may still keep production limits in place at its next meeting on March 4, despite a recovery in oil prices.
There is room for the OPEC+ group to ease production limits, but it is unlikely to bring more than 2.2 million barrels per day back to the market, said ABN AMRO.
⑤ U.S. Economic Data Mixed: Initial Claims Surge, “Scary Data” Beautiful
On Wednesday, the U.S. monthly retail sales rate for January was 5.3%, a record high since June last year. The annual rate was 7.4%, the highest since September 2011, filling all the declines of the past three months, and the largest year-over-year increase in core retail sales in history (11.8%). Growth in the retail sales index was not only strong, but also comprehensive, with significant increases in every major category. Analysts generally believe that the January rebound in retail sales was related to the $600 personal allowance.
However, Thursday’s initial jobless claims number was a big surprise. U.S. initial jobless claims for the week to Feb. 13 registered 861,000, far exceeding expectations of 765,000, and the previous value was revised sharply from 793,000 to 84.8. This suggests that the recovery in the U.S. job market remains unsatisfactory and represents a continued slow recovery of the U.S. economy from the new crown Epidemic.
(6) The Federal Reserve and the European Central Bank released the minutes of their January meetings: both emphasized the continuation of accommodative policies in the future
The minutes of the January FOMC monetary policy meeting showed that FOMC members reiterated that the Fed will continue to maintain an accommodative policy in the future, arguing that the U.S. economy may take some time to make substantial progress; that it is important to communicate with the public before adjusting the pace of asset purchases; that stimulus measures and vaccines will give the economy a sizable boost; and that participants stressed that when judging the progress of target The need to “strip out” the short-term factors affecting Inflation.
On Thursday evening, the ECB released the minutes of its January monetary policy meeting, stressing the need for sustained and ambitious fiscal policy to support the economic recovery; members agreed that adequate monetary stimulus remains necessary and will continue to stand ready to adjust all its tools appropriately; the path of inflation is expected to remain well short of the Governing Council’s medium-term inflation target; in the baseline scenario, inflation is expected to recover gradually and this forecast remains broadly valid, but with the emphasis on an expected inflation rate of only 1.4% in 2023.
[Risk Warning].
①Focus on Fed Chairman Powell next week. He will attend hearings of the Senate Banking Committee and House Financial Services Committee next Tuesday and Wednesday at 23:00 to testify on the semi-annual monetary policy report. There is not much new information in the minutes of the Fed’s January meeting released this week, and the market is looking forward to Powell’s testimony next week.
Second, the U.S. House of Representatives is scheduled to vote on President Biden‘s $1.9 trillion stimulus package on Feb. 26. If it passes, it will go to the Senate for a vote and the stimulus plan may be somewhat abated, but it is expected to eventually pass.
③ On February 26-27, the Group of 20 (G20) finance ministers and central bank governors will hold a video conference and are expected to discuss the new crown epidemic, the global economy, and possible ways to cooperate.
Also, keep an eye on the New Zealand Federal Reserve interest rate resolution next Tuesday at 9:00. This will be its first monetary policy resolution in 2021. The market currently believes that the New Zealand Fed is expected to keep interest rates unchanged this time, and although the economy is rebounding from the epidemic, there is still a long way to go before policy tightening.
④In terms of data, you can pay attention to the U.K. unemployment rate in January, the U.S. Conference Board Consumer Confidence Index in February, the U.S. Richmond Fed Manufacturing Index in February, the final value of Germany’s fourth-quarter unadjusted annualized GDP, the Eurozone Economic Sentiment Index in February, the U.S. fourth-quarter annualized quarterly revision of real GDP, and the final value of the University of Michigan Consumer Confidence Index in February.
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