Market Quick Take - June 23 2021 Market Quick Take - June 23 2021 Market Quick Take - June 23 2021

Market Quick Take - June 23 2021

Saxo Strategy Team

Summary:  Equities have pulled sharply higher in the wake of fresh comments from Fed Chair Powell yesterday on his view that the inflation spike will prove transitory. This reassurance helped take some more of the sting out of the reaction to the hawkish perceived shift at the FOMC meeting last week. Elsewhere, oil prices are pushing on the cycle highs as the US shale production comeback seen too weak to interfere with the ability of OPEC to manage prices.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) – VIX is down below 17 on the close yesterday and US 10-year yield is stabilizing below 1.5% underpinning a more confidence in equities taking Nasdaq 100 futures to an all-time-high on the close yesterday. Nasdaq 100 futures are extending the rally this morning in early European trading touching the 14,300 level. The broader US equity market measured by S&P 500 futures are also pushing into the highs back from 15 June.

Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome). Cryptocurrencies survived a test of critical cycle support yesterday, after Bitcoin dipped well below 30,000 and Ethereum dipped very briefly under the prior major low from May of 1,732 before bouncing. Some of the negative attention on the space has been down to Chinese official pressure on Bitcoin mining and usage in the Chinese financial system, with yesterday’s comeback providing a fresh pivotal level of support that will be important to maintain for the bulls.

EURUSD and GBPUSD the EURUSD bounce continues to look modest as the growing theme of tightening central banks globally sees little anticipation that the ECB is about to send any strong message on that front. The 1.2000 level is key psychological resistance for that pair, while 1.2100 or higher would be needed to begin suggesting a reversal of the recent sell-off wave. GBPUSD, meanwhile, is also about the Bank of England meeting tomorrow, where the market is leaning toward the hawkish side on the potential for guidance indicating a tapering of asset purchases. 1.4000 is the key resistance there.

JPY pairs – the key USDJPY rate has crept back close to the 111.00 resistance and currencies positively correlated with risk had a strong session yesterday on the theme of normalizing of rates as many economies emerge from the pandemic. JPY crosses were the biggest movers yesterday, with EURJPY having bounced to over 132.00 this morning from the low near 130.00 on Monday morning as risk sentiment has rebounded strongly and safe haven yields have risen.

Crude oil futures remain bid with Brent holding above $75 and WTI above $73 after an industry report pointed to another decline in US crude stocks. More importantly, the API also saw another big stock draw at Cushing, the massive storage hub where WTI futures contracts are exchanged for physical oil. Strong Midwest refinery demand and a slow recovery in US shale production has left Cushing stocks trailing their five-year average. Besides today’s EIA report, the market will increasingly be focusing on next week's OPEC+ meeting and through their actions see whether the group is seeking higher prices or stability at current levels, which are more than 20% above the five-year average.

Copper (COPPERUSSEP21) has bounced after correcting 38.2% of the October to May rally. This in response to improved risk sentiment following Fed Chair Powells comments (see below), and after China in their first release from state stockpiles only made 20,000 tons available. The response by the market may trigger even bigger future releases, but for now the market has stabilized following a 16% correction from the May peak. Investor involvement remains important at this stage where copper has been supported by risk appetite more than fundamentals, which are yet to show a price supportive mismatch between supply and demand.

Today’s 5-year US Treasury auction will test market appetite following Powell confusing remarks in front of Congress (SHY, IEF, TLT). Although the Fed Chair said that the central bank is nowhere near hiking interest rates, he sounded uncertain regarding the transitory nature of inflation. Thus, the belly of the curve remains vulnerable and today and tomorrow’s 5- and 7-year auctions might be catalyst for more volatility ahead of the personal consumption expenditure numbers. We expect demand to be weak considering yesterday’s average 2-year US Treasury auction which has seen the yield tailing 0.05bps despite liquidity in front part of the yield curve remains high.

What is going on?

Fresh Fed chatter on guidance: US Fed Chair Powell helps offer market reassurance with comments that offered no surprises, as he said the recent inflationary spike has been a surprise, but is something he sees likely will fade. The Fed Chair also said that the Fed will be patient before considering hiking rates. Pricing for a late 2022 Fed rate hike dropped a couple of basis points. Perhaps more interesting were comments from the San Francisco Fed’s Mary Daly, who said that the shift to greener technology could impact jobs and prices and that climate risks could lower the neutral rate. This could be a strengthening theme going forward – lower growth and higher prices (a kind of stagflation) as a results of the green agenda.

Hungary’s central bank hikes rates 30 bps as the consensus expected, but with guidance surprisingly hawkish, in that the central bank said that it will likely tighten further on a monthly basis. This helped EURHUF drop sharply from the 356.00 area highs of yesterday to just above 350.0 this morning. For the front end of the Hungarian yield curve, it appears the market was less surprised, with 2-year rates not shifting notably in the wake of the decision. The hike was a first in over ten years.

Median US Existing Home Price rose 24% year-on-year in May to above $350,000 for the first time and the largest year-on-year increase since the National Association of Realtors began tracking prices in 1999. Low supply of homes for sale is a key factor driving prices higher, as the survey showed that typical homes for sale only spent 17 days on the market.

What are we watching next?

Earnings this week. Today the earnings focus is on IHS Markit, the financial information company and behind many key benchmark indices on the economy and credit, with analysts expecting 11% y/y revenue growth. The company was hit a bit during the pandemic but resumed growth in the previous quarter. IHS Markit reports before the US equity market open. In Europe this morning Pernod Ricard is raising its fiscal year organic profit growth rate to 16% y/y.

  • Today: IHS Markit
  • Thursday: Nike, FedEx, Accenture
  • Friday: Paychex, CarMax

Czech central bank to follow in Hungary’s footsteps today? The Czech central bank meets today and will likely hike rates by 25 basis points to a policy rate of 0.50% to become the second bank in the EU to hike rates after Hungary yesterday. Inflation has risen to the top of the “tolerance range” of 1-3%. Guidance on future hikes will be the chief driver of any notable moves in the Czech koruna, which had strengthened to a new post-pandemic breakout low below 25.50 in EURCZK before that pair rose sharply in the wake of the FOMC meeting last week.

Economic Calendar Highlights for today (times GMT)

  • 0715-0800 – Euro Zone Jun. Flash Manufacturing and Services PMI
  • 0830 – UK Jun. Flash Manufacturing and Services PMI
  • 1230 – Czech Central Bank Repurchase Rate announcement
  • 1230 – Canada Apr. Retail Sales
  • 1345 – US Jun. Flash Manufacturing and Services PMI
  • 1400 – US May New Home Sales
  • 1430 – US DoE Weekly Crude Oil and Product Inventories
  • 1600 – ECB's Lagarde to speak
  • 1700 – US 5-year Treasury Auction
  • 2030 – US Fed’s Rosengren (non-voter) to speak on economy

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 (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.