Market Quick Take - November 12, 2021 Market Quick Take - November 12, 2021 Market Quick Take - November 12, 2021

Market Quick Take - November 12, 2021

Macro 6 minutes to read
Saxo Strategy Team

Summary:  Equity markets closed a bit softer in the US yesterday, but were strong overnight in Asia. The market continues to sort through the implications of the massive swell in inflation numbers after the Wednesday US October CPI data, which sparked the remarkable combination of higher US yields, if lower real yields, and a powerful new rally in both the US dollar and gold.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - Nasdaq 100 futures recovered in yesterday’s session reaching as high as 16,114 which was just above the 23.6% retracement level measured on the current selloff. This morning US equity futures are carrying over the good mood from Asia with Nasdaq 100 futures trading around the 16,060 level. If US bond yields extend their rise from two sessions ago then it could quickly unsettle equities again with US technology stocks expected to lead any weakness.

EURUSD – the momentum of the move lower off the back of the hot US October CPI print on Wednesday may be running out of steam, or it simply had a hard time doing much yesterday on the banking holiday in the US. Either way, the key development is the break below the 1.1500-25 zone, which now serves as resistance as the next key level is 1.1290, which is the 61.8% retracement of the rally from the post-pandemic lows to the highs at the start of the year.

USDJPY – the US dollar is broadly stronger as the market has repriced Fed rate expectations for next year higher in the wake of this week’s hot US October CPI data, though traditionally, USDJPY is more sensitive to longer yields, which have yet to threaten the highs for the cycle – so calling for a USDJPY move beyond the huge line of resistance ahead of 115.00 (not seen since early 2017), a move above 1.75% in the US 10-year Treasury benchmark would be a supportive coincident development.

Crude oil is heading for a third weekly decline as the market continues to focus on the prospect of US intervening to bring down the cost of oil and with that, very elevated domestic gasoline prices, and in California near the record from 2012. A resurgence in Covid-19 cases in Europe and Asia also adding some relief to current tight market conditions. OPEC in its monthly report confirmed the group produced less than its share of the 400k b/d OPEC+ supply hike due to problems among its African members. They also lowered their 2021 demand growth estimate by 160k b/d due to weaker than expected demand from China and India in Q3. Brent will be looking for support around $80 and WTI a couple of bucks lower. Focus on US government action and monthly report from IEA on Tuesday.

Gold (XAUUSD) trades above the key $1835 support level for a third day but so far, the rally has paused with rising real yields from Tuesday’s record low and the stronger dollar both creating some headwinds, while tension at the Russia/Ukraine and Poland/Belarus borders may add a small haven bid. Another signal of caution has been given by the ETF market where fund managers and other investors have so far reacted with limited excitement to the breakout with total holdings, has only registered a tiny increase. Silver meanwhile has extended its gains towards resistance at the 200-day moving average, currently at $25.36. Short-term focus on whether gold can consolidate its breakout as a drop below $1830 now would trigger a negative reaction from traders.

US treasuries (TLT, IEF, SHY). Despite the US bond market being closed yesterday, US bond futures sold off slightly. The belly of the curve continues to sell off this morning. Today’s University of Michigan survey might add to the weakness. However, the focus remains next week’s 20-year bond sale, a much less popular tenor than this week’s benchmark 10-year and 30-year tenors, promising more volatility.

German Bunds (IS0L). European sovereigns were not immune to the volatility in US rates. However, while in the US the yield curve was bear-flattening, in Europe the Bund yield curve has bear-steepened by 4bps. The reason for this divergence lays in the fact that interest rate hikes expectations in Europe come much later than in the US, moving long-term yields. Ten-year Bunds are now trading well above their 200 days MA in an ascending trend above –0.25%.

UK Gilts (IGLT). Gilt yields adjusted slightly lower yesterday amid disappointing Q3 GDP and output numbers. The market is still pricing four interest rate hikes in 2022, giving investors plenty of room to scale back further on rate hikes expectations if needed. However, next week’s UK CPI numbers might contribute to more weakness.

What is going on?

Tension at the Russia/Ukraine and Poland/Belarus borders. The US is warning its allies in the EU over Russia’s buildup of forces near the Ukrainian border as a possible sign of the intent to invade, and Poland is calling for an emergency summit with EU leader as it seeks to halt inflows of migrants from Belarus at its border, a situation US officials believe has been orchestrated by Russia.

Wheat futures (ZWH2) in Chicago trades near the most expensive since 2012 while Paris Milling wheat futures (EBMH2) trades at a record high amid surging inflation and worries over a possible further slowdown in exports from Russia, the world’s biggest shipper. Record demand from buyers in Asia, the Middle East and North Africa putting upward pressure on prices in a year where production has been challenged due to bad weather. Expectations for a strong harvest season in Australia and Argentina only providing a small amount of relief should Russia, due to continued high prices, decide to keep more of its crop at home to help suppress domestic prices.

European stocks to watch in early trading. The Swiss luxury maker Richemont has reported 1H operating income of €1.95bn vs est. €1.49bn driven by margin improvements rather than revenue growth upside, although 1H revenue was 3% higher than estimated. AstraZeneca is reporting a disappointing Q3 result with EPS ex-Covid vaccine at $1.08 vs est. $1.25, but keeps its guidance unchanged.

Newly IPO’ed EV maker Rivian gains 22%. Rivian finished yesterday at a market value of $107bn despite having zero revenue taking equity valuations to a new extreme we have not seen before. While demand seems incredibly high for EV stocks, investors should be careful at current levels as the expectations are excessively high to justify the valuation. Sentiment can change quickly.

What are we watching next?

Who will US President Biden nominate to head the Fed next February? We have written on this extensively before, we will merely keep this short notice as a placeholder reminder that this could generate significate short term volatility on the choice of the nominally more dovish Lael Brainard over current Fed Chair Powell, though we see little difference in the implications for monetary policy, and the Fed is likely to get a prominent new regulatory role either way.

US Nov. Preliminary University of Michigan Survey – there has been a discrepancy between this survey and the Conference Board Consumer Confidence survey, with the Michigan survey suggesting that general sentiment is worse than it was during the heart of the initial pandemic crisis, while the conference Board survey has merely dipped and is closer to post-Covid outbreak highs than the lows. An additional focus will be on the Inflation Expectations component of the survey, where the 1-year expectations continue to make new highs in line with the spike in official CPI measures, while the 5-10 year expectations have risen, but have so far topped out at 3.0%, which is also the high of the range since 2011. This inflation expectations measure is one of the ones used by the Fed to determine whether inflation expectations are becoming unanchored.

Earnings Watch – today’s earnings focus is on Pinduoduo and Li Auto, with the weaker than estimated Q3 results from Tencent creating a sense of potential disappointment from Pinduoduo, which is also being impacted by China’s ongoing technology regulation. Finally, earnings from Coupang were postponed from yesterday to today.

Friday: KBC Group, AstraZeneca, Richemont, Pinduoduo, Li Auto, Coupang

Economic calendar highlights for today (times GMT)

0800 - Czech National Bank Meeting Minutes

1350 – ECB Chief Economist Philip Lane to speak

1400 – UK Bank of England’s Haskel to speak

1500 – US Sep. JOLTS Job Openings

1500 - US Nov. Preliminary University of Michigan Expectations


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

Apple Sportify Soundcloud Stitcher


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, 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. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such 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.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

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

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.