Market Quick Take - March 19, 2021 Market Quick Take - March 19, 2021 Market Quick Take - March 19, 2021

Market Quick Take - March 19, 2021

Macro 4 minutes to read
Saxo Strategy Team

Summary:  The US equity market suffered one of its worst days, in broad market terms, as the S&P 500 index fell by the most in two weeks, and the selling in the mega-cap heavy Nasdaq 100 was even more intense. The culprit seemed the unwinding of the belief that the Fed forecasts for its likely rate path are not accurate and the lift along the entire US yield curve beyond two years. Rising risk adversity also triggered the biggest oil correction since October while the bad mood followed through in Asia, with mainland Chinese shares under significant pressure.

What is our trading focus?

Nasdaq 100 (USNAS100.Iand S&P 500 (US500.I) US equities suffered their worst session in at least two weeks, with the more interest rate sensitive Nasdaq 100 falling further than the broader S&P 500, although all major indices for small- and large caps suffered on the day. The slip-up in the S&P 500 index has taken it below the previous highs and the next focus is the first major Fibo retracement support at 3,876 (close to the 21-day SMA) and the bigger 61.8% retracement level at 3,813 is less far away now and an important support for staving off a larger correction. The Nasdaq 100 found resistance near that critical 13,245 area (the 61.8% retracement of latest sell-off wave)and looking to the downside, the last level ahead of the 12,200 lows from March 5 is the 12,615 area Fibo retracement (61.8% of the recent rally off those lows). Yield sensitivity is one thing that will continue to dominate, but as volatility rises, selling sometimes becomes reflexive.

Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome) - Bitcoin is making a valiant attempt to avoid being associated with the weakness in speculative stocks as it trades near 58k after a stumble to about 56.3k overnight. The recent disappointment of the plunge back below the previous February highs of 58k+ can be wiped away if Bitcoin can rally above 60k and sustain the price action there or higher for a couple of sessions. Ethereum, meanwhile, is stuck in its quietest range for quite some time, with the midpoint around 1,800.

AUDUSD – the commodity currencies all suffered set-backs after trying to rally in the wake of the FOMC meeting and the supposedly inflationary implications of a passive Fed. AUDUSD was a bit softer overnight on Chinese iron ore futures selling off and the generally weak sentiment, not to mention weak Australian Retail Sales. Still, the pair trades far from the recent 0.7620 area low and is about midrange between the post-FOMC meeting top near 0.7850 and that low. The next directional move in either direction looks set to extend significantlyparticularly to the downside now that the chart has traced out a what would amount to a head-and-shoulders pattern if the price action continues lower toward 0.7620.

USDJPY and JPY crossesafter the BoJ decision theBank of Japan appeared nominally “hawkish” at the margin, according to the market reaction, and the JPY firmed slightly after the bank signaled a slightly wider band of allowed yield range for the Japanese 10-year (still the most aggressive yield curve control by a long shot among currencies). This expansion will quickly lose its importance if global yields continue to rise, though if the pressure on sovereign bonds eases here, and risk sentiment continues to tank, the JPY could back up very steeply indeed after its recent pronounced weakness was a mirror image of a global rise in yields. EURJPY posted a bearish engulfing pattern and is a solid candidate for a correction lower.

Gold (XAUUSD) looks like it is trying to rediscover its reflation credentials. This after finding a bid yesterday despite surging Treasury yields. Ten days ago, when US 10-year real yields traded at –60bp last, gold was challenging support at $1680, some 60 dollars below its current level. A general level of risk aversion, low positioning and geopolitical uncertainties also playing their parts. For now, however it remains stuck in no-man's land with a break back above $1765 needed in order to start attracting fresh fund buying and momentum. Silver (XAGUSD) trailing gold in response to weakness in industrial metals prices where HG copper (COPPERMAY21)is drifting lower towards $4/lb

Crude oil (OILUKMAY21 & OILUSAPR21) slumped by the most since October on a combination of slowing demand recovery, as vaccination efforts in some parts of the world are stalling, combined with surging Treasury yields hurting risk appetite. The floodgates opened once Brent broke below $66.50, and from there it was an almost a straight line drop down to $61.5. While these new lower levels better reflect the current oil market situation, the risk remains that speculators may not yet have fully adjusted their positions. From a technical perspective Brent has broken the uptrend from November but so far found support at the 50-day SMA at $61.50, and a weekly close above would support risk sentiment and potentially signal a bounce next week. Below the next major level of support would be down towards $57.8/b.

Yesterday’s ten-year TIPS auction showed that investors are not rushing to hedge against inflation, yet(TLT, IEF).The bid-to-cover ratio was lower compared to the past three auctions signaling slightly less demand for the inflation protections. However, we have seen for the first time in weeks demand from foreign investors increasing. Today Treasury yields might go through a consolidation phase before resuming their rise.

What is going on?

Bank of Japan declares it wants more flexibility in longer rates – overnight, the Bank of Japan policy review saw the bank outlining a larger-than-expected allowed range for Japanese government bond yields (0.25% either side of zero for the 10-year yield, versus a recent high yield for the maturity of around 0.18%) and dropped its buying target of JPY 6 trillion for Japanese stock funds (while maintaining an upper limit of twice that amount. Japan’s CPI report for February showed headline CPI out at –0.4% year-on-year as expected and core CPI at +0.2% YoY, as expected and vs. +0.1% in Jan.

US treasury yields spike and then fall back slightly US mid- and longer yields spiked anew yesterday on apparent concern that the Fed’s easy attitude on allowing the economy to run as hot as it wants to in the near term could stoke inflation. The 10-year traded as high as 1.75% yesterday and the 5-year yield made a new high at 0.90% before falling back to 0.86% this morningInterestingly, the rise in yields was highest for 5-year to 10-year yields, with the 30-year yield rising somewhat less, therefore flattening the longer end of the yield curve. As well, the market even rejected its initial reaction in the short-term interest rate (STIR, or EuroDollar) market, taking the market’s rate hike prediction well back before the beginning 2023.

Earnings from FedEx and Nike- the message from FedEx was that prices will remain elevated for at least 12 months and that e-commerce sales could likely see a deceleration soon which is key information for those investors with exposure to the e-commerce industry. FedEx shares were up in extended trading. Nike shares were down in extended trading as the sports retailer reported worse-than-expected sales figures and complained about supply chain disruptions.

US-China talks turn ugly - in the freezing temperatures of Anchorage, Alaska, US and Chinese talks quickly descended into bickering”, with finger pointing on both sides, all confirming that the state of relations between the two super-powers is not set to improve after the Trump era saw a transition to a bipartisan hostility to China. Chinese Politburo member Yang Jiechi objected to the US tone, at one point saying: ”Is that the way you had hoped to conduct this dialogue?...I think we though too well of the United States. The US isn’t qualified to speak to China from a position of strength.”

Germany, France and Indonesia set to resume use of the AstraZeneca vaccine - after a review of its safety over concerns of causing blood clots. As it is used in a significant percentage of vaccines in the EU in particular, this should step up the pace of vaccines again.

The Bloomberg Commodity Index, down 3% on the week, is heading for its biggest weekly loss in six months. A disappointing vaccine rollout pace combined with surging Treasury yields have started to hurt risk appetite, and as volatility in both bonds and stock markets rise, some money managers are forced to reduce their near record long exposure across the major commodity futures. Losses were led by the energy sector, especially gasoline and crude oil while pockets of strength are found in corn, aluminum and precious metals. We maintain a bullish outlook for commodities and view the current setback as a long overdue correction.

What are we watching next?

Russian Key Rate Announcement– today’s Russian Central Bank meeting comes at an interesting time, as crude oil suffered an ugly melt-down yesterday and the Ruble had weakened sharply even before that development on US President Biden’s sharp comments on Putin’s culpability in US election interference. The Central Bank not expected to move today but probably needs to clearly signal incoming rate hikes (that are expected eventually anyway) to keep support under the ruble.

Interest rate sensitivity in technology stocks. Yesterday’s move in the US 10-year yield was yet again a reminder that high growth and highly valued equities are particularly vulnerable to rising interest rates with Nasdaq 100 leading the declines. The more speculative segments like bubble stocks and next generation medicine stocks were down the most yesterday. 

Economic Calendar Highlights for today (times GMT)

0900 - Norway Norges Bank Governor Olsen to Speak
1030 – Russia Key Rate Announcement
1230 – Canada Jan Retail Sales

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

Apple Sportify Soundcloud Stitcher


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.

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.