Market Quick Take - February 15, 2021 Market Quick Take - February 15, 2021 Market Quick Take - February 15, 2021

Market Quick Take - February 15, 2021

Macro 4 minutes to read
Saxo Strategy Team

Summary:  Equities closed last week on strong note, with the US VIX measure of volatility closing below 20 on Friday for the first time in nearly a year. US long treasury yields ended the week at new cycle highs and rising yields may at some point prove incompatible with ever rising equity prices, though equity markets are so far brushing off the development. The USD is weak and yen even weaker with commodity - and EM currencies enjoying the most strength.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) – US equities closed Friday on a strong note and at new record highs, with the futures market continuing higher still overnight, although the US market will be close today during regular US trading hours to mark the US President’s Day holiday. Reflecting a new level of complacency, the US VIX index closed Friday below 20 for the first time since the pandemic turmoil began rocking the market in February of last year.

Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome) - the crypto space had an active weekend, with Bitcoin trading to new highs in a bit to take out $50,000 but failing to do so and trading near $47,000 this morning. Trading in Ethereum has stumbled out of the gates this week as the cryptocurrency dropped below 1,700 at one point overnight before rebounding back toward 1,750. Bloomberg ran a story suggesting Morgan Stanley is considering a Bitcoin investment, and Deutsche Bank is said to be planning to offer crypto custody and prime brokerage.

USDJPY – interesting to note that with a backdrop of a broadly falling US dollar, USDJPY is actually trading higher and thus that the JPY is even weaker in the crosses, suggesting that the yen remains very sensitive here to the sudden further rise in long US treasury yields, which closed the week at a new high for the cycle from 7-years and out the curve and where yields rose further overnight in Asia. A close above the recent 200-day moving average test (above 105.50) would begin to suggest that a new uptrend has been set in motion – again, a dramatic development when the backdrop is one of USD weakness.

AUDUSD and EURUSD – quite a contrast here as AUDUSD shook off momentary weakness and is aiming at new highs for the cycle after a strong close Friday, with strong commodities prices offering a supportive backdrop. EURUSD is also higher, but still below the recent pivot high (1.2190) and far below the high for the cycle above 1.2300, suggesting that the euro is being held back by the higher long US yields (and strong risk appetite, which looks less EUR supportive recently), if not to the degree that yields are keeping the yen down as noted above. AUDUSD traders will look toward 0.8000 and even 0.8100 next if the current backdrop continues, but we have argued that at some point, rising US yields become a destabilizing force for risk sentiment.

Crude oil (OILUSMAR21 & OILUKAPR21) - has following a brief pause on Friday resumed its tightening supply-led rally, now with the added boost from an arctic blast in the US reaching all the way down to Texas to potentially disrupt flows from the Permian, America’s largest shale patch. The blast which according to @NWS has triggered record low readings at more than 100 sites in the central US has also sent demand for heating skyrocketing with spot natural gas prices in Oklahoma surging by more than 4000% since Wednesday. The Henry Hub natural gas (NATGASMAR21) contract meanwhile trades up 4.4% at $3.04/therm. In Brent, the front month spread has surged to a one-year high at $0.58/b, on a combination of tightening conditions and speculative demand.

HG copper (COPPERUSMAR21) and platinum (XPTUSD) - continue higher with speculators increasingly being attracted to markets where the outlook points to tight supplies and strong demand. A tailwind that gold (XAUUSD) currently does not have and which together with the prospect for rising yields is sending a signal of unease. Adding to the current tailwinds for industrial metals are reports that the usual China LNY holiday will be felt less on demand with many factories staying open due to travel bans. Copper reached $3.834/lb, a fresh 8-½-year high overnight with the next major target being $4/lb, the 2012 high.

Reflation trade to test market on Thursday with 30-year TIPS issuance (TLT, IEF). Last week 10- and 30- US Treasuries closed slightly above their pivotal 1.2% and 2% levels. This week it will be important to see if they manage to sustain trading above these levels ahead of the 30-year TIPS auction on Thursday, when demand for inflation hedges will be tested.

European sovereigns from the periphery are entering in a honeymoon after Draghi was sworn in as Italy’s Prime Minister (BT10, IS0P). Spread compression in the periphery will intensify this week as Mario Draghi secures his position as Italy’s Prime Minister after two confidence votes in the parliament. This trend can be intensified by the ECB policy meeting minutes if it emerges that more stimulus is being considered by the central bank.

What is going on?

Former US President Donald Trump acquitted in second impeachment trial - seven Republican Senators voted to convict trump in an overall 57-43 vote in favour of conviction, falling well short of the 67 votes needed for a two-thirds majority. Some argue that the process has damaged Trump’s political power from here, and Republican Senate minority leader McConnell made scathing comments on Trump’s culpability in the Capitol Hill riots in early January even while voting not to convict, suggesting that the Republican party will now struggle to figure out if it can move beyond Trump from here.

Biden administration cites concerns about WHO report on Covid - After the WHO visit to China on Covid origins that did not provide definitive conclusions, the US Biden administration maintains it still has “deep concerns” about the WHO effort, questioning whether it had access to sufficient data, especially on early findings. Biden will speak on Covid at the upcoming G-7 meeting on Friday.

COT on commodities in week to February 9 saw speculators increase bullish bets on 24 major commodity futures by 5% to a fresh record of 2.7 million lots, representing a nominal value of $143.7 billion. Position extremes at or near one-year highs were seen across multiple raw materials from crude oil and products to HG copper, corn, wheat and cattle. A post-pandemic growth sprint combined with tightening supply and continued demand for reflation hedges, helped drive the Bloomberg Commodity index up by 3.1% to a 27-month high.

What are we watching next?

The inflection point at which rising safe haven yields become a problem for risk appetite rather than a reflection for a hopeful outlook – we note above the new highs for the cycle for long US treasury yields on Friday’s close, a development that need not necessarily prove a concern as long as it is a reflection of rising hopes for the growth and the post Covid-vaccination economy. But risky assets have been bid up strongly in this cycle on the strong accommodation measures from central banks, and rising long yields change the multipliers upon which now historically elevated asset valuations are based and represent a de fact tightening of financial conditions. As well, the Covid policy response has dramatically raised the debt levels across developed economies, making our economies that much more sensitive to rising yields – so every trader should tread with caution if yields continue aggressively higher.

Earnings releases to watch this week – earnings season continues apace this week, with a number of interesting names to report this week around the world.

  • Today: BHP Group
  • Tuesday: CVS Health Corp, Palantir
  • Wednesday: Analog Devices, Baidu, Twilio, Shopify, Rio Tinto
  • Thursday: Daimler, Walmart, Applied Materials, Roku, Nestle, Airbus
  • Friday: Allianz, Deer & Co, Deutsche Telekom

Economic Calendar Highlights for today (times GMT)

  • US Holiday Today (President’s Day)
  • 1000 – Euro Zone Dec. Industrial Production
  • 1000 – Euro Zone Dec. Trade Balance
  • 1315 – Canada Jan. Housing Starts
  • 1330 – Canada Dec. Manufacturing Sales
  • 0030 – Australia RBA Meeting Minutes

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

Apple Sportify Soundcloud Stitcher

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


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 (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.