US-China relations seem to be hitting a low point as President Biden confirms his administration will hold a tough line on Beijing. On another negative note, we are approaching 100 million Coronavirus cases globally and many countries are still in full lockdown.
Last Friday, traditional markets ended the week on a mixed note, with the S&P down, the Nasdaq up, Treasuries and yield more or less flat, the dollar timidly moving up, and gold retracing sharply.
Traditional markets today took a breather after yesterday’s highs following US economic optimism surrounding Biden’s inauguration and proposed stimulus plan. Most markets remained flat, or slightly in the green, whilst the Nasdaq and 10-year treasury yield rose 0.5% and 1.1%, respectively.
We are on the 21st in Asia but, in the US, they are finishing off an important day: President Biden’s inauguration. Markets felt undeniably risk-on.
Markets reopened in the US and now feel somewhat risk-on. Yesterday the S&P jumped almost 1% while treasuries and gold remained muted. The dollar index fell sharply. Early in Asia, futures are edging higher in Japan and Australia, but seem to be leaning towards a dip in Hong Kong.
Yesterday, we experienced muted volumes and trading during MLK day (equities, bonds, and OTC markets are closed in the US). Crypto markets were open but moves were also muted, albeit for a different reason. BTC prices seem to be narrowing into a—bullish?—pennant with a midline at about $36,000.
It will be an interesting week for trading in Asia, as most will look at the economic data coming out of China in the coming days. Last Friday, global indexes fell by about 1% across the board, and this morning, futures look set to follow.
While US politicians continue with impeachment proceedings, on the economic front, Powell assures investors that now is not the time to think about reversing the easing measures that are in place. On a shorter term basis, markets were spooked by yet another jump in jobless claims.
In traditional markets, we see a simple continuation of the previous session’s dynamics. The S&P rose slightly after some intraday swings. Investors bought some more treasuries, pushing the 10-year yield down, but still above 1%. Gold is stagnating at $1,850. BTC has been more dynamic and bullish. After four down sessions and a pullback that took us more than 25% below the all-time high, BTC bounced back. The day is closing 10% up, at $37,500.
Yesterday was a somewhat uneventful day in the markets. Equities in the US swung up and down to end the session perfectly flat. The 10-year yields retraced earlier gains after a government auction was met with solid demand. The dollar fell sharply, retracing the previous sessions’ gains. Gold took a pause from the massive downward moves and timidly bounced up, currently at $1,855.
Although one can’t say that BTC is a leading indicator for the traditional markets, the risk-off move we saw yesterday definitely hinted at moves seen outside crypto.
On Friday, European and American markets closed the sessions with a risk-on tilt. Some indexes pushed to record highs (again). Treasuries continue to be sold, now tumbling to lows not seen within the last six months. The dollar rebounded slightly, while gold fell a significant 3.4%.