Market Quick Take - January 14, 2021 Market Quick Take - January 14, 2021 Market Quick Take - January 14, 2021

Market Quick Take - January 14, 2021

Macro 4 minutes to read
Saxo Strategy Team

Summary:  Markets are steady in the US, while the Nikkei 225 pulled to new highs once again overnight. US President Donald Trump was impeached, with ten Republicans joining the effort, though no trial is likely in the Senate before Trump leaves office. US yields ended the day lower yesterday but backed up rather sharply overnight, likely on reports that president-elect Biden is planning a larger than expected stimulus after inauguration.

What is our trading focus?

  • Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - US equities are still discounting expectations about more stimulus in the US and do not seem to buy the Fed QE tapering talks at all. Momentum remains intact with the most strength shown in the broader S&P 500 futures compared to the Nasdaq 100. The VIX Index also declined to 22 yesterday which is a positive factor for future equity returns. S&P 500 Dividend futures Dec 2022 are still up 6.5% year-to-date showing the strong demand for buying the growth rebound.

  • Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome) - crypto assets continue to find support after the wild volatility to start the year. Yesterday, ECB President Lagarde was out with broadly negative comments on Bitcoin, saying that it is a “highly speculative asset” and bemoaning Bitcoin’s role in “some funny business and some interesting and totally reprehensible money laundering activity.” Bitcoin traded as high as $38,000 this morning.

  • AUDUSD and EURUSD – both of these important USD pairs trading in muted ranges yesterday, with AUDUSD closer to showing that it wants to resume the uptrend, if still having lost upward momentum, while EURUSD Is languishing a bit close to local support, but further consolidation in the USD higher is possible without upsetting the USD down-trend. Key next levels if we are set for a larger USD consolidation are 1.2065 in EURUSD, and if AUDUSD is unable to sustain above the 0.7666 low from earlier this week, a very well-defined upward sloping channel will be broken that could mean a push down to 0.7500.

  • USDJPY – the USDJPY moves yesterday suggest that USDJPY remains very sensitive to moves in US yields as the pair bobbed back above 104.00 on news that the incoming Biden administration may be considering a larger than previously expected stimulus. They key upside level, though, for any more notable move in USDJPY, which has traded in a choppy, but very persistent downward sloping channel for months, is the 104.50 area.

  • Strong demand in 30-year Treasury auction pushes yields down, but Biden’s plan for a $2 trillion fiscal stimulus reverses yesterday’s gains (10YUSTNOTEMAR21, TLT, IEF). Yesterday 30-year auction had seen strong demand as investors were securing the highest yield in an auction since February. However, Treasuries might fall again today as reflation fears rise. Biden is looking to go through with $2 trillion fiscal package putting more pressure on inflation. Bostic’s speech this afternoon might give more insight into the tapering intentions of the Federal Reserve.

  • Crude oil (OILUSFEB21 & OILUKMAR21) has paused with rising US fuel supplies off-setting a temporary cold weather-related surge in demand from Asia where LNG, likely to peak this week, has rallied off the charts The IEA sees the global oil glut enduring to end-2021 amid pandemic related demand challenges. Goldman meanwhile has lifted its July forecast to $65/b while J.P. Morgan has lifted its 2021 forecast to $61/b. Focus today, the Monthly Oil Market Report from OPEC, due around noon CET. Brent support at $55/b and resistance at $57.50/b.

What is going on?

  • China’s trade surplus hit a record last month as global stay-at-home consumers went on a buying binge for consumer goods. Imports of commodities meanwhile was mixed with the three of the current bull markets of crude oil, soybeans and copper all seeing a slowdown in demand. Crude oil imports slumped to 9.1 million barrels/day, a 27-month low, while copper and soybeans imports both dropped to a seven-month low. Coal and natural gas imports both hit record level ahead of peak winter demand.

  • The incoming Biden administration may be planning a $2 trillion stimulus - to deal with the impact of Covid-19, according to a report from CNN, an amount that is larger than the amount for a package circulated by Senate Democrat leader Schumer and may be behind a pick-up in US yields late yesterday. Details were non-existent on the package. A key question in the Biden presidency will be how amenable key individual Democrat and independent senators are to Biden’s stimulus and other initiatives. This is also an issue in the House, given that the incoming Democratic majority in the House will be slimmer than it was over the last two years of Trump’s presidency.

  • Trump impeached, but no trial likely until after he steps down? - Trump was impeached by all Democrats in the House and ten Republicans on charges of inciting insurrection. This means that a trial is to be held by the Senate, but Republican Majority leader Mitch McConnell is waffling on how he would vote on conviction of the president and says there is not sufficient time to try Trump before the end of his term next Wednesday, though a trial and vote on whether to convict could take place after Trump leaves office.

  • More Fed officials set hurdles for any Fed tapering - more Fed officials were out speaking yesterday and either generally pushed back against the talk of tapering asset purchases (as did voter Brainard, who said that “the current pace of purchases will remain appropriate for quite some time” ) or set goals on inflation for any Fed moves, with regional Fed president Harker wanting to see 2% inflation before any taper talk, while Vice Chair Clarida was the most explicit, saying that inflation must be above 2% for a year before Fed rate rises can begin. Presumably, he is referring to the PCE core inflation, which last achieved that level of inflation over 12 months in 2005-06.

What are we watching next?

  • Will Italy be able to form new government coalition – yesterday, Matteo Renzi, leader of a small party in the government coalition, pulled his party out of that coalition, which will send the government scrambling to cobble together a new coalition. Italian BTPs (sovereign debt) rallied sharply yesterday, suggesting that the market sees little risk of political chaos or new elections.

  • US public unrest risks ahead of the election? - US lawmakers have issued warnings that groups plan to protest the result of the 2020 election in the US capital and at all state capitals this weekend and some groups have encouraged carrying firearms to demonstrations. Hopefully, none of this occurs, but some measure of caution is warranted after the events of last week.

  • Vaccine impact on Israeli Covid-19 infections – Israel has now vaccinated 23% of the population with most people only getting the first dose, but the country has also started giving the second shot and the country said yesterday that it is beginning to see the positive impact from vaccination. The coming weeks will provide the market with an idea of the positive impact from vaccinations which is directly linked to future economic growth and our reflation trade.

  • Q4 2021 earnings season starts this week. Q3 2020 earnings season was the big comeback for corporate earnings and the market expect the momentum to continue in the Q4 earnings season. Delta Air Lines is reporting earnings today with quite muted expectations so the US airliner can almost only surprise to the upside. Tomorrow is the most important day this week when JPMorgan Chase, Citigroup, and Wells Fargo report Q4 earnings and more importantly provide the market with an update on loan losses and the US economy.

Economic Calendar Highlights for today (times GMT)

  • 1230 – ECB Meeting Minutes
  • 1330 – US Weekly Initial Weekly Jobless Claims and Continuing Claims
  • 1400 – US Fed’s Rosengren (non-Voter) to Speak on economy
  • 1530 - US Weekly Natural Gas Storage Change
  • 1600 – US Fed’s Bostic (Voter) to Speakon panel
  • 1730 – US Fed Chair Powell to Speak
  • 1800 – US Fed’s Kaplan (non-voter) to Speak
  • During the day: OPEC’s Monthly Oil Market Report

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.