Market Quick Take - July 15, 2021 Market Quick Take - July 15, 2021 Market Quick Take - July 15, 2021

Market Quick Take - July 15, 2021

Macro 5 minutes to read
Saxo Strategy Team

Summary:  Yesterday saw an uninspiring session in US equities, with the major averages closing lower on the day while small cap and value stocks were quite weak, perhaps in part on falling yields at the long end of the US yield curve. Those lower yields inspired fresh yen strength and a weak session in Japan, while China is looking at finishing its session in green after slightly stronger than expected June economic data.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) – the Nasdaq 100 index ended the day very slightly lower, perhaps partly held up by a new steep drop in US treasury yields after the prior day saw treasuries yields pulling sharply higher. The median stock did poorly, and small cap and value stocks were notably weak on the session, a strong sign of concern for the broader averages, which could see a consolidation of some scale here. The S&P 500 Index momentum was divergent at the recent highs (lower momentum readings at the price high). First levels of note are perhaps the 21-day averages at 14,525 in the Nasdaq 100 and 4,291 in the S&P 500 if a bout of consolidation sets in.

Wells Fargo (WFC:xnys) has been the long banking giant in the US to get a boost from its earnings report this week, as the main street-focused bank announced a solid beat on profits, revenue and expenses. But all of the big banks have noted a fall in lending as consumers and businesses have enjoyed the largess from US stimulus programs.

Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome) – Cryptocurrencies pulled back higher after the recent slide, keeping Bitcoin well away from the critical 30k area for now and Ethereum from the equally pivotal 1,700 area. Fed Chair Powell was questioned on the cryptocurrency market in testimony yesterday and mentioned that “there are some risks with stablecoins right now” and that they could need to be more closely regulated if they are to play a significant role in US payment systems.

EURUSD – the EURUSD support area below 1.1800 has so far held with yesterday’s reversal (the 1.1775 area is the approximate neckline of a head-and-shoulders like formation that has developed since late last year, with 1.1704 the major price low of this year). The bounce coincided with an unwinding of the reaction in Fed expectations to the very hot US June CPI print and perhaps to a degree on the lack of any new urgency on the need to tighten in Fed Chair Powell’s testimony yesterday (more on that below). But steering away from support is one thing – a solid rally that retakes 1.2000 is needed to bring new energy to the long-term bullish case.

USDCAD – as noted below, the Bank of Canada meeting was less hawkish than anticipated, with the maintenance of a forecast for no rate hikes until at least the second half of next year as perhaps the key disappointment that led CAD lower, taking USDCAD well back above 1.2500 as of this morning as short Canadian yields dropped slightly, although a chunky correction in oil prices also played a part in sending CAD lower. USDCAD bears will want the 1.2600 area resistance to hold in USDCAD, otherwise the territory back toward the massive 1.3000 may open up in the weeks ahead.

WTI Crude Oil fell sharply yesterday in the wake of the US DoE crude oil and product inventory reports yesterday as gasoline stockpiles rose a bit over a million barrels versus expectation for a drop of two million barrels. Overall crude oil stocks dropped nearly eight million barrels versus the drop of four million barrels expected, taking US stockpiles further below five year averages. Brent crude also sold off, but less so, with the local support for TWI coming in at 70.76 and for Brent just above 72.00 per barrel.

Gold (XAUUSD) is trading nervously after a poke at its 200-day moving average yesterday around 1,826, and managed to maintain that level into this morning, likely in part on US real yields coming under strong pressure this week on the hot US June inflation data. Fresh assurances from Fed Chair Powell were also a boost. Still, the 1,850-1,900 zone looks a high hurdle to clear for now, but if the market loses its faith in buying into the Fed’s “transitory” inflation narrative, a rally could yet be in the making. A rally to 1,850 would mark a neutralization of the entire downside in the wake of the June 16 FOMC meeting.

US Treasuries (SHY:xnas, TLT:xnas, IEF:xnas) Long US treasuries found support yesterday as the reaction to the weak T-bond auction the prior day was reversed and as US Fed Chair Powell indicated no fresh discomfort after recent US inflation readings and said that reaching “substantial further progress” is still “a ways off”.

What’s going on?

US Fed Chair Powell holds ground on Fed’s policy stance. In semi-annual testimony before a House panel yesterday, Fed Chair Powell held his ground on the Fed’s view of inflation despite heated question from House members, saying that it has risen more than expected, but continuing to expect that it will prove transitory. Clearly, the Fed is also very focused on the labor market, where the “substantial further progress” that the Fed has cited as important for signaling more tightening is still “a ways off”. The Fed is clearly confused about how still high unemployment will be resolved, especially given the clear availability of jobs. Powell said that he will watch closely whether the expiration of enhanced unemployment benefits will help bring new labor supply to meet the demand, although he predicted that “even after this supply comes, it is still likely that we will still be short of maximum employment”.

Bank of Canada the latest central bank to taper QE – the Bank of Canada yesterday announced a tapering of its asset purchases of C$1 billion per week, taking the pace to C$2 billion per week, a move that was widely expected. In its statement, it waxed fairly optimistic, but seemed to want to buy some insurance on fresh Covid variant concerns and lowered its GDP growth estimates for this year, while raising them for next year. Maintaining a forecast for no rate hikes until at least the second half of next year.

Strong Australian jobs report overnight. The employment change number for June was strong, coming in at +29.1k, but importantly, full time positions rose +51.6k, and the unemployment rate dropped back to 4.9%, nominally below the pre-pandemic lows of 2018-2019, although a drop in hours worked was noted and Australia’s largest city Sydney is in a new lockdown

Chinese data marginally better than expected. China’s Q2 GDP rose slightly lower than expected year-on-year at 7.9% (vs. 8.0% expected), but the sequential QoQ measure was stronger than the 1.0% expected, printing 1.3%.  June Retail Sales data rose 12.1% YoY vs. 10.8% expected and June Industrial Production rose 8.3% YoY vs. 7.9% expected.

What are we watching next?

US child tax credit payments set to go out starting today. The payments, set to run for the next six months and paid mid-month, are a part of US President Biden’s $1.9 trillion stimulus plan and would mean that just under 40 million households (with 65 million children) will be eligible to receive $250-300 per child, depending on age. As this is money for households that earn under $75k, the proclivity to spend the $15+ billion per month could be high and feed straight into the economy, retail sales, etc.

EU publishes “Fit for 55” climate plan – making its aggressive climate targets clear (55 is a reference to a 55% reduction in CO2 emissions relative to 1990 levels by 2030). The comprehensive plan outlines initiatives like the carbon border tax that would tax imports based on the carbon emissions involved in their production, the phase out of petrol-burning cars, etc.. This is an enormous project that would have enormous consequences, but would first have to be ratified by member EU countries.

Earnings for the rest of this week. More big US banks reporting today, with the pattern noted from all banks that lending activity is weak on the strength of US fiscal largess, while the investment banking is flying high on M&A, even as trading activity has generally declined (note Charles Schwab reporting tomorrow, for example).

  • Today: US Bancorp, UnitedHealth, Cintas, Morgan Stanley
  • Friday: Charles Schwab, State Street

Economic Calendar Highlights for today (times are GMT)

  • 1230 – US Jul. Empire Manufacturing
  • 1230 – US Jul. Philadelphia Fed Survey
  • 1230 – US Weekly Initial Jobless Claims
  • 1300 – Canada Jun. Existing Home Sales
  • 1315 – US Jun. Industrial Production and Capacity Utilization
  • 1330 – US Fed Chair Powell to Deliver Semi-annual testimony to Senate Panel
  • 1430 – US Weekly Natural Gas Storage Change
  • 1500 – US Fed’s Evans (voter) to speak
  • 2245 – New Zealand Q2 CPI


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

Apple Sportify Soundcloud Stitcher

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 07

  • 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 rise of populism: Far-right parties will influence the future

    The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.

    Read article
  • Investing in China: Navigating Q1 amid economic challenges

    Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.

    Read article

The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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 (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo 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 or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

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. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

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

The information or the products and services referred to on this site 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 are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

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