Análisis de mercado diario

It’s Thanksgiving in the US which means stock markets and bond markets are closed across the pond. Trading volumes will be thin elsewhere. That doesn’t mean there’s not a lot going on to analyse, trade and cogitate over.

Asian stocks had a mixed day and European equities are trading modestly higher. The broadest index of Asia—Pacific shares outside Japan fell to a six-week low, having posted a small decline in each of the past six trading sessions. Wall Street ended higher overnight and is back testing record highs as tech stocks bounced back from a selloff earlier in the week.

Decent US data to push US growth higher

Yesterday, we got the release of the Fed’s preferred measures of inflation for October which saw headline and core PCE running at 5% and 4.1%, new cycle highs.  The weekly initial jobless claims figures dropped to their lowest in over 50 years. Even if statistical issues were at work, this suggests ongoing improvement in the labour market. The figure is also in many ways remarkable after prints of six million less than two years ago.

Spending and income data also suggest a solid start to the fourth quarter, even as prices accelerate further. US growth of between six and seven per cent are being forecast for the last three months of the year, while interest rates remain near zero.

Fed tilting to quicker taper, earlier rate rise

It’s no surprise that the dollar is trading near its highest in almost five years versus the Japanese yen and nearly 18 months to the euro, just above 1.12. The stronger greenback is a headwind for emerging market equities and was also supported yesterday by the hawkish bias evident in the FOMC minutes.

Several policymakers said they would be open to speeding up the tapering of the Fed’s bond-buying if the high rate of inflation continued to run higher. In turn, they would move more quickly to raise interest rates. Bond yields moved north with the short end of the bond curve (2-year yield) touching post-Covid highs at 0.65%. The market is currently pricing in over two 25bp rate hikes next year, with the first fully priced in for the June FOMC meeting.

USD pausing at the top

The dollar index, heavily weighted by the euro, is pulling back from the highs this morning. The combination of a bullish Fed and fourth waves in Europe has propelled the DXY to overbought levels. German business confidence (IFO) published yesterday also painted a less upbeat picture on the outlook for Europe’s largest economy.

The weekly dollar index chart shows the clear upside break in early November. The greenback is now heading for five straight weeks of gains. Bulls will target highs made back in June 2020 around 97.80. Stretched levels of buying may see a pullback with support around 96.27.

Happy Thanksgiving to one and all!

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Global risk sentiment remains raw, as investors continue contending with this week’s surge in Treasury yields. US stock futures are pushing lower once more, following 3 consecutive days of losses for the S&P 500 and the Nasdaq. Asian equities are in the red at the time of writing.

Market participants are willing to bet that the swathes of fiscal and monetary support for the US economy will lead to bigger inflationary pressures.

Amid this Fed-fiscal fete, investors are trying to pre-empt when the central bank might ease up on its asset purchases, which could then pave the way for an interest rate hike.

Such a narrative has prompted a selloff in US Treasuries, with 10-year yields breaching the psychologically-important 1.30 mark this week, though they’ve moderated since.

Reflation trade stoked by US recovery optimism

Investors have been paring their exposure to equities as they attempt to sort through this conundrum. It remains to be seen whether the reflation bet will be vindicated by a strong showing in US inflation.

Still, investors would be remiss if they were to already fully exclude the pandemic’s downside risks. Thursday’s larger-than-expected US weekly jobless claims dented some of the optimism surrounding the positive surprises earlier in the week, validating the Fed’s insistence that the US economy remains a “long way” from a full recovery.

The February US Markit PMIs due later today may add more colour to investors’ views as to whether the rosier economic outlook remains warranted.

Stocks to get more cues from the Biden-Powell show next week

In order for risk-on sentiment to be restored over the coming week, it may require the Biden-Powell tag team to really come through. Fed Chair Jerome Powell is set to deliver his semi-annual testimony before the Senate, and it remains to be seen whether the scheduled Fed speak over the coming days will tamper these rising yields. Then, a week from today, President Joe Biden’s $1.9 trillion fiscal stimulus package may be put through its first floor vote in the House of Representatives.

The hopes for more incoming US fiscal stimulus remain a pillar for equity bulls, even though it may herald a ramping up of US inflationary pressures. Should the Fed be able to convince markets that any tapering remains a distant event, that should spell more upside for stock markets as they continue to lavish in the easy money flow in the interim.

Gold losing out as inflation hedge

Spot gold has clearly languished in the wake of this surge in Treasury yields, with the precious metal trading around its lowest levels since July. Bullion is on course to register 7 consecutive days of losses, its longest losing streak since November 2018.

Gold is having a tough time trying to win investors over in validating its role as an inflation hedge, with other assets currying more favour instead.

The optimism surrounding the US economic outlook also does not play into gold bulls’ hands, while the surge in Treasury yields is eroding demand for the non-yielding precious metal.

Until investors are shown real signs that inflation is picking up, they’re unlikely to have much reason to hold on to the precious metal in the interim.

Gold’s waning appeal is evidenced by ETFs shedding their holdings of the precious metal by almost 974,000 ounces so far this year.

From a technical perspective, gold’s downtrend since posting that record high back in August remains firmly intact. Having formed a death cross just this week, with the 100-day simple moving average (SMA) set to join its 50-day counterpart below the 200-day SMA, such a technical event typically heralds further declines over the near term. With momentum pointing south, coupled with the fact that prices have yet to conclusively drop into oversold territory, spot gold could yet dive closer towards the psychologically-important $1700 mark.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Global markets are revisiting a familiar script, with investors pushing broad asset classes higher on more signs pointing to the US economic recovery.

US stock markets posted new record highs and the futures contracts are holding steady at the time of writing. The S&P 500 is now able to boast of a year-to-date gain once more, led by energy and financial stocks this week. Tech counters remain favoured by investors amidst a string of better-than-expected earnings, pushing the Nasdaq 100 to its highest-ever closing.

Oil prices are also getting in on the act, with WTI futures set for a fifth consecutive daily gain to reach its highest levels in over a year. This return to the "way things were" is also marked by signs of subdued day-trader mania, with GameStop having plummeted almost 90 percent from its 2021 peak amid the WallStreetBets-fueled frenzy. The stock however remains 184 percent higher so far this year.

Stronger jobs recovery to set base for more risk-asset gains

Risk sentiment has been buoyed by Thursday’s lower-than-expected US jobless claims data, which marked its third weekly decline and also its lowest reading since late November.

This positive surprise has already prompted markets to make upward revisions to their forecasts for the January non-farm payrolls data due later today.

Markets are expecting a print of 105,000 jobs added last month, which would be an about-turn from the 140,000 jobs lost in December.

However, the unemployment rate is set to remain unchanged at 6.7 percent, which is still some three percentage points higher compared to pre-pandemic levels. Such figures still underscore the need for more government support, even though President Biden’s $1.9 trillion proposal risks being diluted on evidence that the job market recovery is truly underway.

With more states easing their respective virus-curbing measures, the labour market may find itself on firmer ground in the weeks and months ahead, along with the Covid-19 vaccine that continues making its way through the US population. On top of that, economic conditions are expected to be restored at a faster clip once more fiscal stimulus is unleashed upon households and businesses.

Such a risk-on narrative is what’s prompting market participants to push risk assets higher, and this momentum in the markets could gain more impetus with a better-than-expected NFP print.

Gold declines on Dollar resilience

However, the US dollar and gold apparently are not singing the same tune as the rest of the choir.

The greenback has defied the consensus calls for its weakness this year, which in turn has sent bullion to its lowest levels since early December. The precious metal has also struggled against the steepening US yield curve. The idea that the US economic recovery would lead to faster inflationary pressures has not played out in gold’s favour, perhaps to the chagrin of the precious metal’s bulls.

With spot prices now trading below the psychologically-important $1800 level, and with a technical death cross looking imminent, gold is set to have a battle on its hands in trying to claw its way back into investors’ good books.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Last week, I wrote about how a Dow Jones index that reads above 30,000 was a matter of when, not if.

That day has now arrived.

The Dow posted a closing price above the 30,000 mark for the first time in its history on Tuesday. And with stock futures pointing north at the time of writing, there could be more gains to be had in Wednesday’s session, before US markets close for Thanksgiving on Thursday.

The gains in US equities were powered by stocks in the energy and financial sectors, as investors stuck to the US economic reopening theme, prompting the S&P 500 to also post a new record high.

Risk assets have clearly been heartened by positive developments on key fronts: a surer transition for the US Presidency, a dovish US Treasury Secretary waiting in the wings, and a third Covid-19 vaccine supplier that’s closer to rollout.

Such headlines have only emboldened traders to flock to the markets, bucking the sleepy trend that’s typically associated with this time of the year. US exchanges have seen 13 billion shares being traded per day so far this week, which is a whopping 75 percent more volume compared to the same period in 2019! Looks like the shopping spree isn’t limited to Christmas stocking stuffers this year.

As long as the narrative surrounding the vaccine-enabled global economic recovery isn’t derailed, along with the Fed’s ultra-accommodative stance staying intact, that ensures that this rally has more room to run going into 2021. The FXTM Trader's Sentiments are net long on the US SPX 500 (Mini).

Dollar in the doldrums?

The Dollar index (DXY) will also be in focus today, amid a slew of US economic data. Before investors can dig into servings of freshly-carved Turkey meat and stuffing, they must first digest the latest US weekly jobless claims, October personal spending, and the second reading of Q3 GDP, all to be released on Thanksgiving-eve. Further signs of an economic recovery that could meaningfully boost US inflationary pressures could send the DXY below the psychologically-important 92.0 level, with the September low of 91.74 next in its sights.

Then there’s the latest FOMC meeting minutes as well, also due on Wednesday. Investors will be eyeing how the Fed intends to boost its support measures for the world’s largest economy, with such a decision potentially arriving at the central bank’s meeting in December. Should investors get a stronger whiff of more incoming stimulus, that could fuel more gains for riskier assets while prompting safe haven assets such as the US Dollar to explore more of its downside.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Global stocks are set to end the week on a downer, as Treasury Secretary Steven Mnuchin and Fed Chair Jerome Powell engage in a public disagreement over how US stimulus funds should be deployed.  Mnuchin had asked for the yet-unused US$455 billion from the Fed’s emergency pandemic lending programme to be returned and injected into the US economy; a proposal that was met with swift rejection by the Fed.

Such frosty exchanges between the US fiscal and monetary sides being exposed to the public arena only further erodes the already-fragile market sentiment, prompting investors to adopt a risk-off stance. The Dollar index remains supported above the 92 psychological level while yields on 10-year Treasuries extend the pullback below the 1% mark.

Vaccine doubts eroding investor confidence

Faced with the merciless pandemic that has triggered a late-night curfew in California and school closures in New York, markets have now come upon yet another fork in the road. Investors are awaiting signals on whether to revert to the pandemic-era playbook of sticking with lockdown beneficiaries such as tech megacaps, or press on with the rotation play which is underpinned by expectations of an incoming Covid-19 vaccine and a fresh round of US fiscal stimulus.

Yet, the euphoria surrounding the vaccine is fast dwindling, as investors are still left to decipher the duration and the extent of the vaccine’s effectiveness. Amid this void of crucial information, biotech stocks are losing some of their mojo, while pandemic-era stalwarts are returning to the fore.

US political impasse dampens market mood

Keep in mind that the Democrat’s agenda is on a knife’s edge, pending the pair of Senate runoffs in Georgia in January. It remains to be seen whether Democrats can gather enough political mass to push through its policies, including a larger stimulus package. In the meantime, the political stalemate is depriving the US economy of some much-needed stimulus, which in turn is denying riskier assets a clear mandate to push even higher.

Note that the latest weekly reading on initial US jobless claims coming in worse than expected at 742,000, which is still more than three times higher compared to pre-pandemic levels. The stubbornly high jobless claims, coupled with the underwhelming October US retail sales data which was released earlier in the week, compound concerns that the US economic recovery is at risk of stalling out.

Winter is coming

Given the uncertain timeline before we can see a world that’s vaccinated from Covid-19, or the chances of attaining herd immunity, coupled with persistent fears of a double-dip recession in major economies, global investors would indeed do well to brace for a dark winter and take care not to slip on the icy path ahead.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.