Midweek Market Podcast – April 7


The Market Week – April – Week 1

 

The focus of attention once again this week is on the Bond market, as the US 10-year treasury yield reversed from 1.76% to 1.63%, which also pulled the USD lower, as April got into full swing following the Easter holidays. President Biden outlined his $2.25 tn Infrastructure plans, with more details promised during the month. The IMF lifted global growth forecasts to 6% for 2021 on expectations of a strong US economy.

The details of Bill Hwang’s Archegos Capital collapse came into focus as Credit Suisse announced a loss of $4.7 bn. and parted ways with their Head of Risk (Lara Warner) and their investment banking chief (Brian Chin). Archegos had reported assets of $10 bn but highly leveraged positions of around $50 bn when the margin calls began.

Unemployment remains stubbornly high globally but this week signs of a turnaround continued in the USA. The Non-Farm Payroll was a blockbuster, beating the consensus of 650,000 new jobs for March and posting a 916,000 gain, with unemployment falling to 6.0% and revisions for 2021 adding an additional 156,000 new jobs. However, last week’s unemployment claims moved up over 700,000 again to 719,000, missing expectations, and the private payrolls from ADP also missed expectations at 517,000.

The vaccine rollouts continue to gain traction globally, however, the situation in the EU, with rising infections, extended lockdowns and a low vaccination rate, coupled with the persistent concerns over the AstraZeneca vaccine, weigh on the EUR. India and Brazil remain key infection hotspots. There have been 678.6 million vaccines given across 179 countries.

This week FX volatility continued as the USD reversed its March gains. The USDIndex fell from five-month highs at 93.45 to test lows at 92.25. EURUSD moved over 1.1800 from five-month lows at 1.1704 to test the 200-day moving average at 1.1880. USDJPY was the biggest reverse, moving from one-year highs at 110.96 to 109.57 lows. Cable moved up from the mid-1.3700s to test 1.3900 once again.

Global stock markets turned more volatile as the rotation from high growth technology stocks to financials, energies and industrials continued. The USA30 & USA500 posted new all-time highs, over 33,400 and 4,080, respectively.

The Gold price moved significantly higher this week, from the key $1685 support level, breaking and holding over $1725 and peaking at $1745 as the USD and yields cooled. Bitcoin also had another volatile week and consolidates around immediate resistance at $58,000 but eyes a new all-time high over $60,000.

USOil prices moved lower and remain under $60.00 a barrel as the consequences of the OPEC+ production increases weigh, balanced by the improving economic outlook as forecast by the IMF.

The yield on the US 10-Year Treasury Note holds above the psychological 1.50% level but has retraced significantly from the 14-month highs last week at 1.76% down to test 1.63%.

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Stuart Cowell

Head Market Analyst

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