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This week’s U.S. bond yields set off a Gold, stock and currency market riots, 10-year U.S. bond yields once again broke through the 1.5% resistance barrier, the potential to set a weekly 5 straight up. The future direction of U.S. bond yields caused analysts to debate.
Goldman Sachs believes that the wave of U.S. bond selling is far from over, yields will go further.
Bank of America’s chief equity strategist believes that 1.75% will be a turning point, if yields rise to this level, may open the next wave of stock market crash.
There are also novel analysts who believe that yields will soon top out and may even turn negative.
The climb in U.S. bond yields hit the gold and silver markets, as the opportunity cost of holding increased, spot gold and silver suffered a sell-off, both shocks lower, gold fell below the 1700 mark early Thursday morning, refreshing a new 9-month low, this week’s amplitude of more than $ 60; silver also once lost the $ 25 mark, the weekly potential to pick up a large negative line.
The currency market also suffered a baptism. This week, the U.S. index and U.S. bond yields synchronized higher, the U.S. index took down 91, 92 two big mark. Non-US currencies are generally under pressure. As of press Time, the euro hovered near a 3-month low against the dollar; the Australian dollar also fell for three days in a row, losing the 0.77 mark. News of the UK’s tax increase plan announced further dampened the sentiment of the pound bulls.
Global stock markets suffered a big drop this week. The three major U.S. stock indexes, the Nasdaq fell the most, as of press time this week’s cumulative decline of more than 4%, the S&P 500 index fell slightly by 1%. Asia-Pacific stock markets also performed poorly, with the HSI narrowly missing the 29,000 mark; A-shares were in shock, with the GEM index down nearly 5% on Thursday and the SZSI index also down more than 3%.
Crude Oil, on the other hand, defied the pressure of the rebounding U.S. dollar to stage a strong rally. Wednesday’s EIA inventory recorded the largest increase in history, but the sharp decline in gasoline stocks in the sub-data seems to have ignited the enthusiasm of the bulls, once jumped 3% on the same day. Thursday’s OPEC+ decision not to increase production was a market explosion, the two U.S. and cloth oil closed up nearly 5%.
Bitcoin rose and then fell this week. The first few days of the week since the power surge, once from the week’s low storm pull over $ 9,000, but the second half of the week rebound weakness, as of press time back to the $ 48,000 mark near.
This week, SEC chairman nominee Gary Janssler attended a Senate hearing, and some of his statements released signals of strict regulation, making cryptocurrency enthusiasts feel some nervousness. But at the same time, many financial moguls are still buying, with billionaires betting on bitcoin and Citi saying it could one day become the “currency of choice” for global trade.
[Weekly Highlights].
Powell ignores bond market storm
One of the most significant financial events this week was undoubtedly Powell’s speech on Thursday.
As mentioned in the previous section, U.S. bond yields continued to spike this week, triggering chaos in the gold, stock and currency markets, so Wall Street had expected Powell to respond in this public speech. Two days before Powell’s speech, Fed Governor Brainard said U.S. debt has caused concern to the authorities, hinting at the possibility of action.
However, Powell’s speech was a big disappointment to the market. As in previous public speeches, he reiterated the Fed’s strong commitment to its goals, and also highlighted the job market woes and Inflation issues, but he still felt it was not enough to trigger a policy adjustment now. For traders most looking forward to his response to the bond market, Powell said he did not think it was time to adjust accommodative policy, and Powell again mentioned that the premise of rate hikes is that the Fed needs to see employment maximized and a 2% inflation target.
Market analysis suggests that Powell did not try to curb the rising trend of long-term interest rates on Thursday, although he issued a warning to the bond market, so there was a double kill in the U.S. stock and bond markets that night.
CNBC expects that the most likely are two means, one is to carry out the third “Operation Twist” (OT) in history; the other is to raise the reserve The other is to raise the reserve rate or adjust the interest rate of the overnight repo operation in the U.S. bond market.
February non-farm payrolls far exceeded expectations
This time, the small non-farm payrolls again hit the face. The ADP employment report released on Wednesday was less than expected, which once caused the market to worry about the performance of the big non-farm payrolls released on Friday night.
However, the result was unexpected. The U.S. quarterly non-farm payrolls in February recorded an increase of 379,000, better than market expectations, the largest increase since October last year. The U.S. unemployment rate in February recorded 6.2%, a new low since March last year. However, some analysts pointed out that in this report, the good news is bad news. On the one hand this could bring forward the expected interest rate hike; on the other hand it could be the reason for the Republican Party to veto the 1.9 trillion stimulus bill.
Democrats make major compromise, $1.9 trillion stimulus bill to see final review
Last weekend, the U.S. $1.9 trillion bailout plan was passed by the House of Representatives to accelerate the process of the stimulus bill. On Thursday, the U.S. Senate held a procedural vote to move the plan forward, but all 50 Republican lawmakers opposed it, and it was only after Vice President Harris cast a crucial tiebreaking vote that Democrats passed the Senate and were able to formally begin consideration.
At the end of this week, the stimulus bill ushered in the “final hearing”, Senate Majority Leader Chuck Schumer said that no matter how long it takes, the Senate will continue to meet this week to complete the bill. But from the procedural vote, we know that it will not be easy to get this bill officially passed in the Senate, to go through a cumbersome process.
While Biden has already made two major compromises this week – dropping the minimum hourly wage proposal and supporting an increase in the stimulus checkout threshold – while making one key commitment – that the U.S. will have enough of the new crown vaccine available to all U.S. adults by the end of May (two months earlier than the previously projected target by two months), but Senate Republicans will likely oppose the bill on grounds of oversizing, among others, and they will likely emphasize the fiscal situation.
OPEC+ not to increase production in April, investment banks have raised oil price expectations
The 14th OPEC+ ministerial meeting was held at 21:00 GMT on Thursday and its decision was unexpected, with oil prices surging that night.
Before the meeting, sources kept releasing that OPEC+ would start gradually increasing production from April as oil prices climbed in recent months. But as it turned out, OPEC+ announced an extension of production cuts until May. Saudi Arabia is inclined to phase out its voluntary crude production cut of 1 million barrels per day starting in May, with the amount of the gradual increase depending on the pace of compensatory cuts by members that violate quota rules.
Analysis says that Saudi Arabia is making a big gamble that U.S. shale oil will not ride the wind of soaring oil prices to increase production, but also that Asian crude demand will cool in the coming months. If you win the bet, Saudi Arabia and other OPEC members will be the biggest winners, and if you lose, it will be very costly.
It is worth noting that after the OPEC+ meeting, Wall Street has raised its expectations for oil prices. For example.
Goldman Sachs’ forecast for Brent crude oil increased by $5/bbl to $75/bbl in 2Q and to $80/bbl in 3Q.
Morgan Stanley, which expects a supply shortfall of 1.4 million to 1.9 million bpd in the oil market in 2Q and 3Q 2021, reiterated its forecast for Brent crude oil prices to reach $70/bbl in 3Q 2021 and expects them to reach $80/bbl in a bullish scenario.
JPMorgan raised its Brent crude oil price forecast under the OPEC+ decision by $2-3/bbl.
Retailers are active again, with several new targets
Retail investors have become active in the market again in recent weeks. Some analysts attributed Tuesday’s drop in U.S. stocks to another retail short sale – Rocket Companies, whose shares jumped 70% on the day, is suspected to be the latest target of a retail short sale, with comments on it from users of Reddit’s WallStreetBets forum Tuesday spiked nearly 19 percent.
In addition, the group of retail investors who believe in silver manipulation theory is back. Media outlets are reporting that Reddit users are buying ads in places like Times Square, the same way they urged people to buy GameStop at the time – someone is raising money for the “silver shorting” campaign.
In addition to silver, this retail investors have several new targets – the Bank of Japan and the Swiss central bank. In recent days, the Bank of Japan and the Swiss central bank shares suddenly surged, especially the Bank of Japan, a cumulative increase of 93% this week. Analysts believe that no factor other than retail investors can explain why central bank shares have seen such a spike.
Industrial metals see big pullback as two pieces of supply-side news ignite short-side sentiment
Commodities had surged collectively in February as the “commodity bull” view took off. Goldman Sachs, in its latest research report on Tuesday, stepped up its advocacy of the “commodity super cycle,” saying that commodities are still “the best asset to hedge against inflation” and raised its forecast for commodity returns to 15.5% over the next 12 months.
But the situation seems to have changed in recent weeks, with industrial metals prices showing a downward trend over the past five trading days. The wave has been led down mainly by nickel. On Thursday, nickel prices plunged, falling hard from a six-year high reached last week above $20,000 per ton. Behind the sudden market turnaround was all due to bearish news coming from the supply side. on March 3, Norilsk Nickel, the world’s largest nickel producer, made an announcement that one of the company’s largest mines in the Russian Arctic would see a steady inflow of water, and the recovery of nickel supply brought a degree of short-side sentiment to the market.
HSI ushered in the biggest change in its history
On March 1, Hong Kong‘s Hang Seng Index, which has a history of over 50 years, announced details about the optimization of the Hang Seng Index, including increasing the number of constituent stocks, shortening the listing history requirement, and adopting an 8% weighting cap for all Hang Seng Index constituent stocks. The move will affect USD funds that track the index as well as southbound funds.
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