MM Quickie

(GMT+8)
2021-01-18

World MM Monday Review: Jan 11-15

Monday Review

Equity

US stocks fell on weak job and consumption data released on Thursday despite Biden’s $1.9-trillion fiscal proposal, which fell short of expectations by about $10 million. Jobless claims rose by nearly 1 million people last week. US retail sales also slowed for 2 consecutive months. Staple stocks declined; technology stocks were unaffected, eg. PHLX. While Europeans and US stocks slumped last week, emerging Asia were on the rise. Taiwan Weighted Index (TAIEX) closed slightly lower but held above 15,600 points as TSMC raised capital expenditures.

Forex

DYX index inched 0.3% higher during the week, the biggest weekly increase since November, as weak economic data fell under expectations and confirmed COVID cases hit new high. Euro fell while USD firmed. EM forex continued to strengthen as more investment entered EM, pushing commodity currencies higher.

Fixed income

10-year US Treasury dipped after hitting the 1.18% peak yet maintained above 1%, indicating investors remained risk-averse. High-yield bond yields fell marginally while EM bonds yields increased.

Commodity

Gold and oil were both shaky last week. Gold price has rebounded from December lows as inflation expectations heat up and the President-elect introduced a new stimulus. WTI oil price closed over $52 per barrel despite lockdowns. Copper fell. Crops climbed higher as USDA lowered estimates of inventory.

  • Put/call ratio showed no obvious ups and downs, staying between 0.76 to 0.78. AAII bullish sentiment remains high. Commodity is expected to continue growing as inflation rises. EM stocks are catching up with developed country stocks.

  • An “all-sector recovery” is still underway as we expected. The market maintained optimistic yet positive sentiment did not further increase, chances for pullbacks increasing. Fundamental data are providing support for the stocks and pullbacks are normal. We are still bullish on stocks as DXY dollar index stays low, providing liquidity to the market.