Podcast: Chinese regulator sees what many others refuse to: a bubble
Overnight, a prominent Chinese regulator expressed concern on bubble risks, foreign and domestic, and the Chinese market is in a very different place from other markets, both in technical and valuation terms. Also on the call, we look through the latest comeback attempt for US and European equities, express concern on the US dollar, discuss credit and next levels for sovereign bond yields, look at the most notable correction in commodities in some time and more. On today's call were Althea Spinozzi on fixed income, Peter Garnry on equities, Ole Hansen on commodities, and John J. Hardy hosting an on FX.
Market Quick Take - March 2, 2021
A real case of whiplash for traders with a global perspective yesterday and overnight, as US equities posted one of their best days in months, while the mood in Asia was bleak and mainland Chinese shares suffered a particularly weak session as the top banking regulator in China warned of foreign market bubbles. Elsewhere, commodities are selling off sharply, with gold nearing support at 1,690 per ounce, while the US dollar remains quite firm.
COT: Emerging caution despite continued strength
Futures positions held and changes made by hedge funds across commodities, forex, bonds and stock indices up until last Tuesday, February 23. A week that saw growing unease across markets as bond yields continued to rise. A continued rally in commodities attracted profit taking from funds in both energy and metals while they added further length to an already record agriculture long.
Fixed income market: the week ahead
This week, we might see a consolidation of sovereign bonds worldwide as central banks look to stop their rout. Yet, Treasuries' bearish trend has been established, and we expect the consolidation to be only temporary. In the United States, the Covid-19 stimulus bill, Powell's speech on Thursday and Nonfarm payrolls on Friday will be in the spotlight. Many highlight that if ten-year yields break above 1.65%, we might see another squeeze within Mortgage-Backed Securities holders, pushing yields fast towards 2%. Across the Atlantic, European investors remain in the hands of the European Central Bank. The market will be looking at the latest bond-buying figures today to understand whether the pledge to cap yields is real. In the United Kingdom, Rishi Sunak's budget on Wednesday and Thursday's 10-year Gilt auction might provoke yields to resume their rise.
Podcast: Can it really be that easy?
oday we look at the strong start to the new week and new month after Friday saw the most immediate cause of concern - spiking bond yields - easing back lower. Australia's RBA announced a doubling of longer term bond purchases and the ECB has railed against higher yields recently as well, and the US House just passed the $1.9 trillion stimulus, which now must pass the Senate. Is the market trying once again to celebrate central banks having the market's back - perhaps prematurely? A look at commodities and FX developments on the call as well. Today with Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX.