Market Quick Take - March 16, 2021 Market Quick Take - March 16, 2021 Market Quick Take - March 16, 2021

Market Quick Take - March 16, 2021

Macro 4 minutes to read
Saxo Strategy Team

Summary:  Yesterday saw US equities firming again, with the S&P 500 index and the major small cap indices posting new all-time highs again, while the Nasdaq 100 lags, but also posted a new local high. The Asian session was also generally positive as we await a key FOMC meeting tomorrow and how the Fed tackles the SLR rule that could trigger considerable volatility in the US treasury market, which has been at the root of recent market volatility.

What is our trading focus?

Nasdaq 100 (USNAS100.Iand S&P 500 (US500.I)a very strong session for the broader US market yesterday, with the S&P 500 Index posting a new record high and the Nasdaq 100 index poking above recent range highs in overnight trading after the cash index closed right at its 21-day moving average near 13,082. This bespeaks a confident attitude heading into an important FOMC meeting tomorrow, which could spark considerable volatility in either direction, depending on the Fed’s messaging on rate guidance and the SLR issue noted below. Traders should respect the risk of trading range expansion in the wake of the meeting.

Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome) - a bit of a stumble in the crypto space, as the weekend’s new all-time highs well north of 60k in Bitcoin were rejected rather sharply yesterday and overnight, with the overnight action taking Bitcoin south of 54k at one point. The price action in Ethereum is far more stable – as it did not post a new high recently and trades this morning in the middle of the range of the last week, just below 1,800.

EURUSD– a key week for EURUSD after last week’s ECB meeting failed to provide much ammunition for any upside arguments, or directional arguments in general, leaving the USD in the driving seat ahead of an important FOMC meeting on Wednesday, where signals that move rate expectations higher (doubtful to see a significant percentage of Fed forecasters shifting their rate hike forecasts) could boost the US dollar. The most likely issue that could trigger a USD rally or sell-off is how and whether the Fed tackles the SLR issue (described below), while sticking to the original “dot plot” and/or any measures addressing Treasury market liquidity and other signals that result in a significant consolidation of US long treasury yields could provide a headwind for the US dollar. For now, the bears are in control as long as EURUSD remains south of 1.2000.

USDJPY and JPY crossesthe very weak Japanese yen of late has been driven by a rise in global bond yields globally, widening the spread between those yields and the lower yielding long end of the Japanese yield curve, which the market suspects the Bank of Japan is not willing to allow to rise after recent signals from BoJ governor Kuroda. This Friday’s Bank of Japan meeting will deliver the conclusions of a policy review that should make clearerthebank’s position on how much it wants to control yields. As well, the JPY is moving lower into the end of the Japanese financial year at the end of this month. Historically there have been a few notably changesin JPY direction with the transition to the country’s new financial year. The next key level in USDJPY is 110.00. Also note comments for EURUSD above and on the FOMC below that could trigger notable USD volatility.

Crude oil (OILUKMAY21 & OILUSAPR21) continues to trade in a relative tight range in Brent defined by $67 to $70. It highlights the short-term risk of the market having reached alevel from where current fundamentals are not yet strong enough to support further short-term strength. In our weekly COT update we noted that during the past four weeks to March 9, a 12% rally in crude oil triggered no additional increase in the combined net long from funds which currently stands at a 2-1/2-year high at 731k lots. While rising US bond yields and the stronger dollar has lowered investment appetite, these developments may also signal a stronger recovery in global demand is needed to justify even higher prices. Focus on IEA’s Oil Market Report on Wednesday. 

20-year Treasury auction to set sentiment before FOMC meeting (TLT, IEF). Today the US Treasury will sell 20-year bonds, and it will be key to understand whether foreign investors’ demand is increasing as yields continue to rise. Last week, foreign demand disappointed, but it didn’t spark a deeper selloff in US treasuries. We believe if demand disappoints today and tomorrow the Federal Reserve sounds slightly dovish, Treasury might resume to fall with yields trying 1.65%, which many highlight it to be a level which would trigger another convexity episode within the MBS market which would send Treasuries on a fast rise to 2%.

High demand in the primary market continue to support credit spreads despite fund outflows (USIG, HYG)Despite news continue to report outflows from corporate bond funds, the primary market continues to be resilient. In recent weeks, companies issuing bonds were able to either increase the issued amount or tighten spreads considerably. The month of March is on the way to become the best month on record of corporate bond issuance.

What is going on?

Volkswagen aims for EV lead by 2025 - in a webcast, the German automaker outlined its plans to save costs and standardize vehicle platforms and technologies to establish itself as the global leader in EVs by 2025 and possibly before. It will also build its own enormous battery factories in Europe in coming years and hinted at eventual transition to solid state batteries. It has invested in the at-times high-flying QuantumScape, which claims a viable solid state battery design.

Germany, Spain, Portugal and others alsosuspend use of AstraZeneca vaccine – although Australia has just announced that it will proceed with its use. The halt of the use of the vaccine in EU countries could delay the overall vaccination goals by a month or more, with EU countries far behind the UK and US in its pace of vaccination (only about a third as many vaccinated as in the US), and Italy recently implementing a harsh new lockdown on rising Covid cases.

In Australian RBA minutes, wage growth emphasized – saying in the minutes that wage growth “would need to be sustainably above 3%” before considering lifting interest rates, and that this would take considerable time, repeating the 2024 time frame. Rate hike bets for 2023 were pared slightly on the news. The RBA maintains a yield-curve-control policy, maintaining the rate at 0.25% out to 3-year Australian government debt securities.

What are we watching next?

Tomorrow’s FOMC meeting and policy signaling from the Fed. Back during the pandemic outbreak last year, the Fed enacted a special “supplemental leverage ratio” (SLR) rule to allow banks to lower the amount of capital held versus Treasury bonds and deposits they hold at the Fed. The rule is set to expire at the end of this month unless the Fed extends it, and a failure to do so could mean new liquidity issues in the US Treasury market as large US banks would likely unwind treasury positions to reduce their leverage.The market will watch closely for whether and how the FOMC addresses this issue, with the political angle that prominent Democratic senators Warren and Brown are against the Fed extending the rule. As well, the market will be sensitive to the least adjustment in the Fed “dot plot” policy rate forecast, especially now that the possibly inflationary Biden stimulus has been passed.

The Bank of Japan meeting and policy review results on Friday - as noted above for the USDJPY comments.

US 20-year Treasury Auction today– interesting timing on this one, as it comes a day before the FOMC meeting and amid so many questions about the pressures of longer term treasury issuance, the shape of the US yield curve and what the Fed plans to do with the SLR issue (noted above).

Earnings releases to watch this week:

The list below shows the most important earnings releases scheduled for this week with names in bold and red marked as those that can impact overall sentiment in equities or their specific industry. Given the increased competition in electric vehicles and the recent success of Volkswagen in the European market this is our highlight of the week, especially after an interesting Volkswagen webcast yesterday

  • Today: Partners Group, RWE, Ferguson, Crowdstrike, ZTO Express Cayman, Lennar, Coupa Software, VolkswagenZalando

  • Wednesday: Sunny Optical, Verbund, Alimentation Couche-Tard, SnamPinduoduo, Cintas

  • Thursday: CK Hutchison, China Feihe, CK Asset, CGN Power, Audi, Nike, Enel, FedEx, Accenture, Dollar General

  • Friday: China Mobile, Zijin Mining, Hong Kong & China Gas, Zhongsheng Group


Economic Calendar Highlights for today (times GMT)

1000 – Germany Mar. ZEW Survey
1230 – US Feb. Retail Sales
1315 – US Feb. Industrial Production and Capacity Utilization
1400 – US Mar. NAHB Housing Market Index
1700 – US 20-year Treasury Auction
2330 – Australia RBA’s Kent to speak

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 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 Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, 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.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. 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 Markets 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 Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

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 such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

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 website 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 intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.