[Market Review].
U.S. bond yields fell slightly. U.S. 10-year Treasury yields fell slightly during the day. The U.S. CPI rose 0.4% month-over-month in February, the ninth consecutive monthly increase, though it was unchanged from expectations. After the data was released, U.S. bond yields fell in response, as market participants originally thought the outlook for consumer prices was more positive. In addition, U.S. bond yields were even closer to their intraday lows after the $38 billion 10-year U.S. bond issue. For now, we can keep an eye on the U.S. bond auction that will take place later today.
The stimulus bill was passed by the House of Representatives. U.S. bond yields fell, as did the dollar. The dollar index has shaken lower during the day. The U.S. House of Representatives has now received enough votes to pass a $1.9 trillion stimulus bill. U.S. President Joe Biden will sign the bill this Friday.
Gold saw a rally. Gold saw a rally as U.S. bond yields and the dollar weakened. Gold prices climbed from $1715 to a high of around $1726 during the day.
Silver shocks to the upside. Silver also saw a rally, touching a high of $26.2 per ounce, up 1.15% intraday, and now trading near $26.
The euro is shaking higher. The dollar weakened, while non-U.S. currencies generally rallied. The euro rose more than 20 points against the dollar during the day, hitting a high of 1.1929, and is currently oscillating in a narrow range at that position.
The British pound hit bottom and rebounded. In the British pound, it touched down to 1.3845 against the dollar earlier in the day, but then saw a rebound, rising a total of more than 30 points during the day.
Bitcoin rose for a fourth straight day. Let’s take another look at bitcoin. Bitcoin jumped $1,000 on the day, its fourth straight day of gains, after the U.S. core consumer price index came in below expectations in February, suggesting that overall inflationary pressures remain moderate. Even so, that didn’t stop bitcoin from rising, with supporters of the digital asset using it as a hedge against rising Inflation going forward.
U.S. oil closed up 1%. Finally, a look at the oil market. U.S. oil oscillated broadly during the day and ended up 1%. U.S. EIA Crude Oil inventories recorded an increase of 13.798 million barrels, dragging down oil prices. In addition, last night’s media rumors of an oops, oil prices surprised by a $1 “V” shape. Initially, the news said that the Russian deputy prime minister said he would increase crude oil production by 890,000 barrels per day starting in May, which is equivalent to withdrawing from the OPEC+ production cut plan. The original intent, however, was that April’s production, which would add 890,000 barrels per day to last May’s production levels, would, in essence, amount to no change. Some analysts chortled that at least we know what effect Russia’s withdrawal from the OPEC+ production cut plan will have. The Russian central bank also said that uncertainty about demand and prices could gradually lower oil prices to $50 a barrel in 2021.
[Risk Warning].
Gold: Inflationary pressures weakening Gold expected to stabilize 1700
Gold rose steadily after the release of the U.S. CPI data in February. Analysts pointed out that the latest inflation data, may give the Federal Reserve to implement a more accommodative monetary policy to provide the reason, gold is expected to continue to stabilize above $ 1700. However, some analysts believe that the U.S. economy will also need to see more sustained and higher inflation if gold prices are to return to last summer’s record highs, which is difficult to achieve because it will take some Time for the economy to recover from the Epidemic.
Dollar: Carry-Driven Exchange Rate Dollar Likely to Outperform
JPMorgan strategists say carry plays an unusually large role in exchange rate performance. As countries emerge from the epidemic, the dollar faces greater upside risk to interest rates and Exchange Rates, given the normalization of monetary policy. By contrast, the euro, the British pound, the Australian dollar and the Swedish krona may run away with it.
British pound: the pound is expected to continue to rise, but is expected to be difficult to break 1.3970
UOB technical analysis pointed out that yesterday the pound against the dollar once upward to 1.3937, short-term may be re-tested upward 1.3925-1.3930 range, but is not expected to break through 1.3970. downside, the initial support level may be 1.3845, then 1.3810.
[Key Outlook].
TBD OPEC crude oil production to decline in February
First, let’s focus on the monthly crude oil market report to be released by OPEC. Last month, OPEC released its monthly report, which showed that OPEC crude oil production increased by 181,000 barrels in January to 25.496 million barrels per day, in addition, the report revised upward the global crude oil demand and supply forecast this year.
By February, the survey showed that OPEC’s crude oil production could fall by 920,000 barrels per day in February due to further production cuts by Saudi Arabia. Separately, energy consultancy JBC forecast that OPEC crude oil production fell 518,000 barrels in February to 24.835 million barrels per day.
Last week, OPEC+ decided to maintain the current scale of production cuts, which is not in line with the market’s general expectations, and Saudi Arabia said it continues to voluntarily cut production by 1 million barrels per day until April. In addition, rapid vaccination will increase crude oil demand, which will gradually deplete crude oil stocks, and the oil market is expected to tighten further.
20:45 ECB may worry about bond yields soaring
Then come the interest rate resolution to be announced by the ECB. When the ECB expanded its anti-epidemic bond purchase program last December, officials promised to maintain a “favorable financing environment”. This has led many to speculate on what indicators the ECB is watching and whether the recent rise in bond yields has caused them concern.
Among the economists surveyed, nearly two-thirds said the ECB will accelerate bond purchases in response to rising yields, with some economists predicting that the central bank will first try to intervene verbally. After bond yields began to soar last week, several policymakers hinted at the need for aggressive moves, but they also stressed that the central bank is ready to deal with any “unreasonable” rise.
The market is widely expected that the ECB will keep interest rates unchanged, but may accelerate the pace of bond purchases to curb the rise in yields. However, some analysts predict that the ECB may continue to verbally reassure the market, rather than adjusting monetary policy. Therefore, you need to pay attention to the ECB’s specific measures, if said ECB to strengthen bond purchases, the euro may appear sharp fluctuations.
21:30 Lagarde’s remarks may depress bond yields
After that, ECB President Lagarde will make a speech. In the last month she said that there is still a high degree of uncertainty about how the epidemic will develop; that the ECB will continue to support all sectors of the economy, maintain favorable financing conditions during the new crown epidemic and, if necessary, expand the size of the emergency anti-epidemic bond purchase program; and that the ECB is closely monitoring the nominal yields on long-term bonds. There will be little change in her stance for this launch.
Pacific Investment Management predicts that Lagarde may say that the economic outlook remains fragile, promising to maintain favorable financing conditions, and that the ECB is closely monitoring rising European bond yields. If anything, her heightened concerns about stronger bond yields suggest that the ECB is becoming more sensitive to spikes in yields, potentially prompting the ECB to increase the size of its bond purchases.
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