Russell Shor

Bond yields are declining sharply as banking worries flare up again. This time its European banks which have triggered the flight to safety. The catalyst is the refusal of Credit Suisse’s biggest shareholder to invest anymore capital in the troubled bank. This, in turn, sparked selling in US regional bank shares as fears heighten that there is a distinct sensitivity to any rate increases within the sector. The CME Fedwatch…

A calm has been restored to the market following the failure of SVB. The key event for today will be retail sales, out at 12:30 PM GMT. Traders will also be interested in the PPI data released at the same time. Yesterday’s CPI came in at 6% y/y, which was lower than the previous 6.4% y/y. Barring any surprises, the market expects the Fed to hike by 25 bps on…

China’s industrial production came in at 2.4% y/y. This is higher than the previous 1.3% but slightly lower than the 2.6% expected. Its retail sales printed at 3.5% y/y, a significant improvement from the previous months -1.8%. Fixed asset investment grew 5.5% y/y YTD, higher than the 5.1% for December.

Bitcoin jumped almost 9% yesterday and 7% on Sunday. This is in response to the confidence crisis across the US banking sector following the SVB failure. The cruptocurrency is also sensitive to front end of the yield curve repricing yields downwards.

The last three trading sessions has seen the US 02-year decline from 5.076% to 4.055%. Today’s trading is especially frenetic after weekended endeavours by regulators to stave off a bank run and prevent contagion from the SVB failure. Over the same period money has rotated into gold as a safe haven.

Chair Powell’s testimony in front of the Senate and House was hawkish and aggressive. Higher for longer and faster were introduced. The market briefly priced in a possible 50bps hike for March. However, the failure of Silicon Valley Bank, lower wage inflation and the uptick in the unemployment rate has the market rethinking this. Moreover, tomorrow sees inflation data – the next piece in the puzzle. Tune in to listen…

USDOLLAR’s correlation coefficient with the real rate is 66%. As long as yields decline and markets reassess the Fed’s actions for March, the dollar is likely to be influenced to a large degree.

NFP Live Trade - 10 March 2023

FXCM’s USBANKS basket dropped yesterday. The basket was down around 9.6% for the day. Shares in JPMorgan Chase and Wells Fargo were down 5% and 6%, respectively.

There is a certain resiliency in the stock market. The SPX500 has charted a higher trough followed by a higher peak. This is an uptrend. The stochastic is a momentum-based indicator. That it has fallen through the 70 level denotes that the SPX500 has lost momentum.

The Bank of Canada kept rates at 4.5%. This was in line with market expectations and its previous communication. By the middle of the year, the BoC expects inflation to moderate to 3%. It will continue to monitor the economy and is prepared to increase rates if needed.