Market Quick take - January 29, 2021 Market Quick take - January 29, 2021 Market Quick take - January 29, 2021

Market Quick take - January 29, 2021

Macro 4 minutes to read
Saxo Strategy Team

Summary:  A volatile session yesterday for US stocks as retail brokers limited trading in stocks at the center of the short squeeze phenomenon, resulting in wild swings in those names and at first supporting risk sentiment as many of these stocks fell, although later the mood soured somewhat into the close and worsened overnight on a very weak Asian equity market session.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) – US equity futures are lingering this morning with Nasdaq 100 futures just above the important 13,000 level failing to find a positive catalyst and instead fixated on the spectacular sideshow in the most shorted US stocks. The general sentiment seems to be leaning negative and if Nasdaq 100 cannot hold the 13,000 level then equities could see substantial downside risk in today’s session as many indicators suggest that hedge funds and other systematic quant funds are deleveraging aggressively with the VIX sitting above 30.

Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome) – crypto currency focus has  switched to some of the smaller coins that have seen tremendous moves recently, while Bitcoin pulled back higher and had a go at the 35,000 area overnight before easing back below 33,000 as of this writing, while Ethereum has found a new resistance line around 1,375 in recent days and traded near 1,300 this morning.

USDJPY – continues to trade near the important 104.50 area and even slightly above the recent pivot high, the first time the pair has broken a pivot high in many months – how the move holds into the close today could define whether a larger squeeze develops and as we noted yesterday, it is somewhat notable that the JPY has weakened despite a firm safe-haven bond market earlier this week, although yesterday did see a weak session for long US treasuries. The 106.00 area looks like the next pivotal one for USDJPY if the rally extends here.

AUDUSD – took a stab at a strong bounce yesterday after the pair was not able to sustain the break of the important 0.7600 area. The bounce was inspired by hopes that general market energy would calm and risk appetite improve on signs that the short squeeze on Wall Street was reversing, but the suddenly souring mood again in late trading and especially overnight, has the Aussie on the defensive and the currency will continue to trade in correlation with global sentiment on risky assets, and bellwether commodities like copper and iron ore. A close near 0.7600 to close this week raises the risk of a test of the next important trend support near 0.7400.

Silver (XAGUSD) temporarily surged the most since August yesterday after the Wallstreetbets group of traders targeted the white metal after someone called it “The biggest short squeeze in the world”. However, lack of understanding about how commodity markets works, and the sheer size of the silver market left the attempt doomed from the beginning and as a result the short-term risk has now turned to one of losses as long bets are exited. The 6.8% rally only drove the XAUXAG ratio down to but not through the double bottom from August at 69.3. Bullion banks tend to be short futures as a hedge against commitments in the spot market. Something that over the years has attracted a crowd of conspiracists believing the metal was kept artificially low in order to hide the existence of inflation. Our bullish silver view is based on increased industrial demand as the green transformation gathers pace, reflation and a weaker dollar.

Treasury bonds lower as the stock market recovers (10YUSTNOTEMAR21). Ten-year Treasury yields remain close to the pivotal 1% level; however, they rose slightly as the stock market recovered from Wednesday’s volatility in the stock market. We still believe that we will see US Treasury yields higher in the long-term as they are still trading in the uptrend they have been trading in since August. In the short-term, they will continue to function as safe havens during market volatility.

BTPs 5- and 10-year auction went well, but demand was lower despite the higher yield offered compared to previous auctions (10YBTPMAR21). We might start to see some fatigue among BTPs investors following this week’s rally. The auction of 5 and 10-year BTPs went well but demand was lower signaling that if a new government isn’t formed in no time there is room for a selloff in the short-term. We still believe that in the long-term the BTP will benefit from spread compression thanks to the ECB’s policies, and any sign of weakness might be an opportunity to add on this position.

What is going on?

Short squeeze in US stocks disrupted in part by broker limitations on trading key names. Nearly every stock that was a target of the short squeeze phenomenon dropped heavily yesterday, regardless of whether it was one of the stocks at the center of the recent attention on most shorted stocks (GME, AMC, NOK) or one of the many other most-shorted names that have been less in the limelight. This was in part due to US brokers limiting buying in key stocks yesterday, they claimed in part due to regulatory capital requirements, as US broker Robinhood, for example, had apparently drawn down a credit facility and announced after hours that it was raising new funding to enable full access to trade these shares again, which buoyed many of the names in later trading. After trading below 200 yesterday, GameStop stock, for example, leapt to above 300 dollars in late trading after the close on this news.

US and France reported preliminary Q4 GDP figures. The first estimate of US Q4 growth, out yesterday, was a positive 4.0% annualized, slightly below the 4.2% annualized growth expected. In contrast, the first estimate for France for Q4 GDP this morning was –1.3% QoQ growth and –5.0% growth YoY, vs. -4%/-7.6% expected, respectively, a solid performance given the scale of Covid shutdowns there. Germany reports its GDP figures later this morning.

German inflation for January comes in hot at +0.8% MoM and 1.0% YoY vs. +0.4%/+0.8% expected, and the “EU Harmonized” number was a hefty 1.4% MoM and 1.6% YoY vs. +0.3%/+0.5% expected, respectively.

Grain markets - Following the recent bout of profit taking the sector led by corn (CORNMAR21) and soybeans (SOYBEANSMAR21) have rallied strongly to occupy the top of the performance table this week. US corn prices hit its highest level in 7½ years boosted by strong sales to China while soybeans and wheat (WHEATMAR21) both stays supported by the outlook for tightening global supplies due to Russian export taxes on wheat while rainfall in Brazil may hamper the upcoming harvest.

What are we watching next?

Will the Short Squeeze “attack on Wall Street” resume or have we seen the peak? The shutdown in trading of key stocks yesterday triggered an outrage among the groups of traders aimed at pumping these names to new heights and it was remarkable to see populists voices on both the left (US Congresswoman AOC) and the right (Donald Trump, Jr.) tweeting their ire at the decision. The situation has garnered so much attention that Democrats in both the House and the Senate announced the intent to hold hearings soon on online trading platform practices. Our conviction is that the most likely angle for a regulatory change is the elimination of the ability to sell order flow information to other operators, which is the key feature that allowed the controversial Robinhood broker to offer “free” commissions to its customers. This practice is not legal anywhere else.

Q4 2021 earnings season kicks into gear this week
Today’s earnings from Caterpillar and Chevron will give good insights to demand in the physical part of the world economy with Caterpillar sitting in the middle of the global construction industry and Chevron being the first major oil & gas company reporting Q4 earnings. Especially insights into demand expectations from major oil companies for 2021 is important for digesting the macro situation.

  • Today: Keyence, Caterpillar, Charter Communications, Eli Lilly, Chevron, SAP, Honeywell

Economic Calendar Highlights for today (times GMT)

  • 0800 – Spain Q4 GDP estimate
  • 0855 – Germany Jan. Unemployment Change / Rate
  • 0900 – Germany Q4 GDP estimate
  • 1330 – Canada Nov. GDP
  • 1330 – US Dec. PCE Inflation
  • 1445 – US Jan. Chicago PMI
  • 1500 – US Jan. Final University of Michigan Sentiment

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.