On Monday, following the large stimulus package passed in the US, equities enjoyed a bullish tilt. Yesterday, investors clearly took some profit off the table; it’s worth noting that there’s a Fed meeting and the release of jobs numbers coming up. Most indexes gave back some of the gains with the S&P down half a percent and the tech-heavy Nasdaq down more than 1.5%.
With the almost $2 trillion stimulus package passed over the weekend, yesterday’s session in the US saw risk assets perform beautifully.
On Friday, at the close of the session, markets were in a pitiful state. Equities dropped, bonds were sold further, and gold continued its descent to $1,730. This morning in Asia, Australian yields seem to be retracing (meaning bonds are being bought) and suggesting at least a temporary change of tune for this session.
We’ve talked about bond yields quite often in this update. While not the most exciting topic, it is a fundamental part of the US and the world economy. Yesterday, following the previous rise to 1.4%, the 10-year yield rose even higher, to 1.55%. Historically speaking, that’s not high, but given the current climate and equity valuations, many investors started to question their allocations.
Continuing on the previous session’s enthusiasm around accommodating Fed policies, equities rose yesterday, with the Dow even reaching new highs. Yields continue to rise as well, with the 10-year up above 1.4%. That being said, some analysts expect that we won’t be able to rise much further, without the central bank stepping in to manage them.
We observed some volatility yesterday, with only limited effects. Equities initially dropped significantly but, with Powell’s speech on the rate outlook sounding accommodating, risk assets erased losses. The S&P and Nasdaq ended up closing flat. The 10-year yield took a breather and stayed at 1.34%. Gold also stayed put, currently at $1,805.
It’s not just crypto that went down yesterday. With rising concerns over inflation and climbing treasury yields, equities gapped at the open and closed the session 1-2% down. The 10-year yield is now up, at 1.36%. The dollar dropped further. Gold, on the other hand, is benefitting and continues to bounce, now at $1,800.
While last week, US markets ended with equities mostly down, this morning in Asia, futures are looking to trade up. It’s worth noting that yields rose further, at 1.35%, with many investors expecting inflation to pick up. Gold seemed to regain somewhat, currently bouncing off the support level at $1,775.
We had a somewhat unenthusiastic session in the US overnight. Yellen reassured markets that a large stimulus package is on its way, but equity indexes still managed to close flat or down. Treasuries, which had previously been sold, remained on the spot. The dollar walked back on yesterday’s gains. Gold is staying put, currently at $1,775.
With progress on the US fiscal stimulus front and data showing a pick up in retail sales, equities rose. The Dow reached a fresh record high while the Nasdaq (read: tech stocks) underperformed. The 10-year yield retreated slightly but is still at a relatively high 1.27%. The dollar rose and gold trended further down, now at $1,777.
Equities reached new highs yesterday and then retracted to close slightly in the red. While investors are feeling bolstered by hopes of an economic recovery, the session’s focus shifted from risk assets to bonds. Treasuries were sold en masse, pushing the 10-year yield to 1.3% (levels not seen since 2019 and before the March crash of 2020). The dollar bounced and gold dropped about 1.35%.
Yesterday, US markets were closed for ‘Presidents’ Day.’ Today, if futures are any indication, they will open upward after finishing last week on a strong note. The S&P, the Nasdaq and the Dow all rose. Unsurprisingly, bonds continue to be sold, pushing the 10-year yield up to 1.2%.