Market Quick Take - July 21, 2021 Market Quick Take - July 21, 2021 Market Quick Take - July 21, 2021

Market Quick Take - July 21, 2021

Macro 6 minutes to read
Saxo Be Invested
Saxo Strategy Team

Summary:  Yesterday saw a sharp recovery in risk sentiment in the US, with equities rebounding and treasuries retreating. But the backdrop elsewhere shows many other pieces do not fit with the notion that we are seeing a comprehensive improvement in sentiment. Establishing a more consistent picture in either direction will be critical tactically to determine the overall market mood.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) – a tremendous rebound in US equities yesterday as the rally entirely erased the previous day’s very steep fall in the S&P 500 and likewise, the Nasdaq 100 rallied and closed back above the Monday highs. The recent low in the S&P 500 index at 4,224 is now doubly important as was a clear technical area even before the recent sell-off and now has served as the actual low of the sell-off. Note that the rally back from the lows saw the market closing just below the 61.8% retracement of the sell-off at 4,322, perhaps a tactical level for the next session o two. With the scale of yesterday’s comeback, any renewed weakness through the recent lows would suggest strong concerns that liquidity is very weak and that large order flows could drive another spike in trading ranges/volatility.

DAX 30 (GER30.I) – watching the European bourses closely today as most of the move in the US equity market yesterday took place after the cash session close. For the DAX, a recovery back above 15,500 would begin to suggest that this was a merely a brief summer swoon, while 14,800-15,000 is the important downside pivot zone if the selling has yet to exhaust itself.

Nikkei 225 (JP225.i) – a very underwhelming comeback for the Nikkei 225 overnight, given the scale of the comeback in the US and the JPY trading sharply off its cycle highs yesterday. The rally in the session overnight was on the order of only 0.5% and still sees this large cap index below its 200-day moving average and some 400 points, or about 1.5% off the session highs.

Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome) – Cryptocurrencies  seemed a bit sluggish in responding to the improved risk sentiment yesterday, but did manage to pull a rally together after Bitcoin had dropped down through the key 30,000 area yesterday, but really needs to recover above 32k sustainably to dig itself out of a hole. Ethereum threatened toward the critical 1,700 area support yesterday, but has rebounded smartly to above 1,850 this morning, likewise needing a considerable rally to neutralize the momentum of the slide from the highs near 2,400 earlier this month.

EURUSD – EURUSD trades heavily this morning again, having rebounded slightly from fresh lows for the recent cycle, but still weighing hard on the key areas below 1.1800 that potentially open the door toward 1.1600 if broken. The pair showed no real beta to the huge positive shift in risk sentiment yesterday as the focus is likely on tomorrow’s ECB meeting and whether fresh dovish guidance on QE plans beyond the end of the emergency pandemic purchases next March will keep the euro under pressure versus the greenback or whether this is already in the price.

USDJPY and JPY crosses – the rebound in US long treasury yields and risk sentiment yesterday drove a rebound in USDJPY off the recent test of the critical 109.08 area we have discussed here in recent days. The tactical situation is somewhat in limbo, as the pair needs to rally well clear of 110.00 for a sense that it is reversing back higher, a move that would likely coincide with a fresh sell-off in US Treasuries together with a general sense that this recent bout of “risk off” will fade. Then again, that would also likely see the USD weakening as well, with other JPY crosses showing higher beta to developments. Note that EURJPY found support yesterday just ahead of its 200-day moving average.

Crude Oil while crude oil rebounded in sympathy with the general shift in market risk sentiment yesterday, the move was far more  muted than in equities as the market deals with the implications of the OPEC+ agreement at the weekend to expand production. A steep hill to climb indeed after Monday’s 5-dollar/bbl sell-off, with the next major support areas perhaps 64.50-65 dollars/bbl for Brent and 61.50-62.00 for WTI. The US API inventory data out late yesterday showed an unexpected rise in crude stocks overall, but a 3.6M draw on stocks in Cushing. The Weekly US DoE inventory data is up later  today.

Gold (XAUUSD) Gold treading water between the important 1,830+ recent highs and the 1,800 tactical downside pivot area as yesterday’s steep rally in risk sentiment and jump in yields on safe haven treasuries off the day’s lows kept interest in the precious metal sidelined.

US Treasuries (SHY:xnas, TLT:xnas, IEF:xnas) As with all assets correlated recently with risk appetite, US treasuries staged a reversal yesterday, ending the day well off their highs, with the US 10-year benchmark notching only a gain of about 3 basis points on the session to 1.22% by the close, but this was nearly 10 basis points up from the days low, potentially an emphatic sign that the rally has found a near term top.

What’s going on?

US is set to abandon its opposition to the NordStream2 pipeline – with the US and Germany agreeing to allow the completion of the natural gas pipeline that directly connects Russian natural gas deliveries with Germany. An announcement of a deal could be set for today. As a part of the agreement, Germany has agreed to aid Ukraine with energy-related infrastructure as the completion of NordStream2 is seen as a risk for deliveries through Ukraine.

German producer prices creep higher once again. June PPI was out at 1.3% MoM and 8.5% YoY. On an annual basis, the largest increases were observed in secondary raw materials from iron, steel and aluminum scrap (+88.1% YoY), energy prices (+16.9% YoY) and intermediate products (+12.7% YoY). This confirms supply chain disruptions continue to push overall inflation higher.

Mixed U.S. housing data. Housing starts surprised on the upside in June at +6.3% to an annualized 1.643M versus consensus at +1.1%. But building permits continue to soften at -5.1% to an annualized 1.598M in June and point to weaker starts this month.

Netflix earnings headlines disappoint, but stock rebounds after hours. The streaming giant Netflix (NFLX:xnas) reported its earnings after the close and announced its first drop in US and Canadian subscribers (430k) but notched overall growth of just over 1.5M subscribers globally and forecast further growth of 3.5M subscribers in Q3, far below hopes for growth of nearly 6M. The stock was down a fraction of a percent before the earnings report in a market that was rallying hard for much of the day and fell a further 1% in late trading after the earnings report only to rebound some 6% as investors perhaps hoped that Netflix’s new initiatives in gaming and especially mobile gaming will bring a new boost to revenue and profit growth.

What are we watching next?

Was that it for the sell-off yesterday? A tremendous rebound in US equities has helped shift the tone notably after the recent steep slide. With the major S&P 500 index having found support at a key tactical level noted above and treasuries retreating sharply from yesterday’s steep rally, it feels like the market is trying to regain its footing, with recent volatility perhaps a mid-summer swoon driven by Covid delta variant headlines and weak liquidity. On the other hand, other pieces don’t fit with the development in US equities: the USD and JPY remain firm, AUDUSD is pushing to new lows this morning and the Japanese equity market, for example, failed to take cheer from the US session. Either way, the lows in equity markets for the cycle this week the world over are a critical line in the sand for maintaining a more constructive tone for risk in the near term, with long safe haven bonds another coincident indicator (whether yields have bottomed).

ECB meeting on Thursday – Expect the ECB to give more insights on the implications on monetary policy of its new strategy and to adjust its forward guidance. We could see the ECB bring some clarity to its definition of the end of the Covid-19 crisis and to link more explicitly the APP to the new inflation target set at « 2% » from « below, but close to 2% ». With uncertainty prevailing regarding the macroeconomic impact of the delta variant in Europe, we see ECB president Christine Lagarde leaning dovish. But behind the scenes, expect a very heated debate between the doves and the hawks about the future of bond purchases.

Earnings for the rest of this week. Among the earnings reports today, Daimler is already out saying that it will have to cut the Mercedes sales outlook for the remainder of this year due to a chip shortage and that the full year production will be similar to last year’s after previously predicting significant growth.  The company did show strong Q2 results. Dutch semi-conductor fab equipment maker ASML upped its revenue forecast for this year from 30% to 35% in today’s call.

  • Wednesday: ASML, Daimler, SAP, Johnson and Johnson, Verizon, Texas Instruments, Anthem, Tenet Healthcare
  • Thursday: Unilever, Intel, AT&T, Twitter, Snap, Biogen, Union Pacific, American Airlines, VeriSign
  • Friday: Honeywell, American Express, Schlumberger

Economic Calendar Highlights for today (times are GMT)

  • 1430 – US Weekly DoE Crude Oil and Product Inventories
  • 0130 – Australia Q2 Business Confidence Survey

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.