Central banks react after yield rally It was a turbulent week for markets as the rapid rise in global bond yields triggered profit taking on stocks and harmed traditional safe-haven currencies, with the S&P 500 and Nasdaq set to close the week with considerable losses, though hold within the neutral-positive territory in monthly terms. Although investors got assurances from the Fed and other central banks that any tightening in monetary policy was long in the future, the yield rally over [..]
As a new month starts, investors will have their eyes locked on the latest nonfarm payrolls numbers out of the United States amid an accelerating selloff in bond markets. The Reserve Bank of Australia’s policy meeting will be the only central bank gathering of the week but is unlikely to provide much excitement. Canadian Q4 GDP figures are also on the agenda but the upcoming output meeting by OPEC+ might matter more for the oil-dependent loonie. It will be somewhat [..]
Bond yields shrug of Powell’s comments; US future point to the downside Nothing could stop bond yields from rising on Thursday, not even the Fed chief Powell, who once again told lawmakers of the House of Representatives on Wednesday that a persistent rapid inflation break above 2.0% will not be the case for the next three years. While his remarks assured investors, who were front-running the Fed, that the current ultra-lose monetary policy is here to stay, the US 10-year [..]
The testimonies by Fed chief Powell before Congress confirmed the central bank won’t overreact to any inflation episode but didn’t reveal anything new. The spotlight now falls on the next batch of US data at 13:30 GMT Friday. The dollar has stopped behaving entirely as a safe haven and has started to realign with US fundamentals, so every data point matters. Rising yields unable to lift dollar The mechanics governing the dollar are changing. After the crisis hit the greenback [..]
AUDUSD has climbed to a 3-year high tracing the upper Bollinger band and is currently tackling the 0.7988 high, stretching back to February 2018. Furthermore, the advancing simple moving averages (SMAs) are defending the prevailing bullish bias. The short-term oscillators are transmitting no signals of fading in the bullish momentum. The MACD, some distance in the positive region, is rising above its red trigger line. The RSI and the stochastic lines remain positively skewed as they are rising in overbought [..]
A battle of the yields is underway as the returns on long-dated government bonds recover to pre-pandemic levels, undermining the allure of riskier assets such as stocks. The rally in bond yields is being led by US Treasuries, as the American economy shines the brightest in the Western sphere. However, while the US dollar got an unexpected leg up from the early stages of the surge in Treasury yields, the strengthening vaccine-led optimism is now spreading to other parts of [..]
Safe-havens yen and franc plunge again as Powell boosts recovery hopes US stocks pull back from sharp dip but elevated yields continue to weigh Pound catapults to fresh highs; aussie, kiwi and loonie soar too Powell reassurance sends safe havens skidding Growing optimism about a vaccine-led recovery continued to reverberate through currency markets on Wednesday, steering riskier pairs to fresh highs, while pummelling traditional safe havens such as the yen and Swiss franc. The latest wave of positive outburst comes [..]
The Australian dollar has been moving sharply higher against the US dollar over the last month as investors are waiting for the capital expenditure data for the fourth quarter on Thursday at 02:00 GMT ahead of the GDP figure on March 3. In the meantime, the aussie is forming a positive structure on the back of the positive vaccine news, which have opened a pathway to a safe Australia. Private capital expenditure slumped by 3% q/q in the third quarter, the seventh consecutive quarter of decline, following a revised 7.1% fall in the previous release. Through [..]
Euro holds resilient above 1.2100; European stocks set for a negative close World shares kicked the week off on a negative note as the endless rally in bond yields made equity valuations look more stretched than they already are. Discussions about reopening plans in Europe created optimism that the vaccine rollout, although delayed, could put the region on a positive path, with investors turning somewhat sensitive to data releases for any early sign. Hence, the upside surprise in the German [..]
Relentless grind higher in bond yields bites stocks, stabilizes dollar Dollar becoming the US currency again, instead of a safe haven? Yen crumbles despite risk-off mood, sterling shines, gold adapts Bond market ruins the party in equities The non-stop rally in global bond yields has started to infect other asset classes, bringing the party in stock markets to a halt and breathing some life back into the devastated US dollar. There hasn’t been any major news, so this repricing appears to be [..]
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