COT: Dollar short and commodity longs cut on U.S. yield spike
Futures positions held and changes made by hedge funds across commodities, forex, bonds and stock indices up until last Tuesday, March 2. The period included the February 25 wash-out in bonds that saw US ten-year yields and the dollar jump while stocks and commodities traded lower on rising deleveraging risks. As a result hedge funds made their biggest one-week reduction in bullish commodity bets since mid-November
Podcast: Twin US treasury yield and USD wrecking balls still swinging
Today we look at the positive correlation between equities and treasuries after Wall Street tried to piece together a strong close to last week after a large intra-week sell-off. But the comeback attempt is crumbling suddenly as the week gets underway, with US treasury futures selling off again and the US dollar firming broadly. Elsewhere, we look at the further spike in oil, delve into FX levels and correlations, preview the week ahead in equity earnings and macro event risks and much more. On today's call were Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX.
Market Quick Take - March 8, 2021
Equity markets sold off heavily all night in Asia, a disappointing start to the week after a snap-back strong finish to the week in the US on Friday, perhaps due to bond yields tumbling after reaching new cycle highs. The mood is low despite the US Senate passing a version of the $1.9 trillion stimulus bill soon set to become law. Elsewhere, an unsuccessful attack on Saudi Arabia oil facilities sent Brent crude prices above $70.
OPEC+ spikes oil while most commodities fret fresh yield rise
The almost synchronized commodity rally seen during the past few months continues to be challenged by an ongoing rise in US bond yields causing risk aversity and a stronger dollar. Metals of most colors, including copper, traded lower while Saudi Arabia's push for higher prices helped drive crude oil to the highest level since last January.
FX Update: USD pops anew on shrug of Powell’s shoulders
The USD rise accelerated steeply yesterday as Fed Chair Powell largely shrugged off the move higher in US treasury yields. And USDJPY went nearly vertical overnight on intervention against rising yields at the long end of the yield curve. The US dollar is now strong across the board and the countdown to the next Fed intervention is underway, but the USD wrecking ball will likely do more damage first.
Interest rate sensitivity on full display
This week was the ultimate proof that the interest rate sensitivity exists and is well alive with highly valued growth stocks hit hard by rising US interest rates. We try to illustrate the sensitivity through our bubble stocks basket and explain the underlying dynamics.