STATE OF THE MARKETS
Cautious markets as Dollar lost bid. The surge higher in US equities didn’t last the whole day, as Dollar lost bid and investors were seen flocking to safe-haven bonds as New York closed on Tuesday. More than $155 billion worth of block orders flowed into US bond futures, as Dow (+0.10%), S&P500 (+1.42%), and Nasdaq (+3.69%) recovered earlier losses. The benchmark US 10Y yields fell down sharply to close below 1.53% as safe-haven demand perked up.
Crude futures fell for two straight days, closed below $64.05/bl, as traders awaited report that may show US inventories build up as Texas refineries were shut down due to recent heavy snow storms. Gold rebounded sharply as more than $119 million worth of block orders hit the futures markets. The yellow metal closed higher, above $1,715/oz, as it hit the demand zone back in April to June last year.
In the FX space, Dollar lost bid in the short term as $1.9 trillion is about to hit the US economy in the next few weeks. Markets seemed cautious in the medium term as high beta Comdolls were running on the back foot, while safe-haven Swiss gained traction in demand. Euro overbid Sterling in the short-term, suggesting a reversal maybe around the corner for EUR/GBP.
G8 CURRENCIES SENTIMENTS
** ST refers to Short-Term which is daily turnover, MT is Medium Term which is weekly
and LT refers to Long-Term which is monthly turnover.
WALL ST MOST ACTIVE
|VOLUME||90 DAYS AVG|
** % Change here refer to price
WALL ST TOP FLOWS
|% CHANGE||FUNDS FLOW $|
** % change here refers to volume
TOP 5 BLOCK ORDERS
|SYMBOL||PRICE/STRIKE||TYPE||VOL/OI||FUNDS FLOW $|
|GC||1,694.40 – 1,710.80||gold futures||700||119.5M|
|ZN/F||123.2150 – 132.0350||US bonds futures||12,260||155,317.2M|
|CL||53.30 – 64.95||crude oil futures||1,200||74.3M|
OUR PICK – XAG/USD
Dollar weakness is temporary. We believe current Dollar weakness is temporary and market is repricing Dollar value as the new $1.9T stimulus took effects. With more than $29 billion USD shorts in the futures market, it’s the lowest bear bet since December last year. In other words, traders are repositioning themselves to cover the Dollar shorts and therefore the reduction of longs in gold, Yen and Euro. Silver was not spared either, as all non-interest bearing assets struggled to retain demand as investors flock to the yields bearing US bonds.
In the equities market, the last two days alone saw more than $240 million worth of equities were sold by insiders, compared to $57 million being bought. In other words almost 80% of insiders are cashing out than adding to their holdings, and this is alarming for just two days and the numbers were even higher last week. This base case, suggested a stronger Dollar in the months ahead, as markets almost fully priced in Dollar weakness in our opinion.
|Short-Term||Buy @ 25.30||25.00||26.15||26.50|
|Medium-Term||Sell @ 26.50||27.10||25.70||25.00|
|Long-Term||Sell @ 26.50||27.10||24.20||22.50|
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