- WTI crude oil futures settles at $85.14 to end the trading week
- Not so fast with that breakout in Treasury yields
- OPEC+ continues to struggle to meet its production quotas
- Beijing reports 12 new covid infections
- Baker Hughes oil rig count falls 1 to 491
- Yellen: Inflation is a valid policy concern
- Bitcoin's head fake to the upside, sends the digital currency lower today
- Someone has to be stocking up on oil on Russian war fears
- Canada December new house price index 0.2% versus 1.0% estimate
- Canada November retail sales +0.7% vs +1.2% expected
- Bitcoin falls through $38,000 as the rout extends
- The CHF is the strongest and the NZD is the weakest as NA traders enter for the day
- BOE's Mann: Inflation data since November haven't been consistent with stabilization
- BOJ's Kuroda: In the short-run, Japan may come under significant negative pressure
- Lagarde: The recovery has been stronger than anyone expected
How can you not start the end of day and week summary by not speaking to the beating the US stocks took.
For the 3rd day in a row the major indices are closing at or near their lows. The Dow and S&P had their worst week since October 20, 2020 (the Dow fell 1600 points or -4.57%). The S&P fell -5.68% on the week..
The Russell 2000 closed at its 52 week low.
The NASDAQ index is down 15.1% from its all-time high reached in November and is trading at its lowest level since June 2021. For the week the NASDAQ fell -7.53%
Technical levels were broken with the 200 day moving average breached in all three major indices.
The stock market was the focus this week, and with the earnings calendar just getting underway (with largely disappointments from the financials and Netflix so far), one has the wonder will it get any better?
By the way, the Fed is on tap for their rate announcement on Wednesday. The chatter is centered on whether they speed up the taper so that they could be in position to tighten policy quicker. The Fed is behind the curve with regard to its inflation mandate although the yield curve has done some of the tightening already. Nevertheless the Fed is still buying bonds and mortgage-backed securities (which does not make sense).
It is always darkest before getting pitch black, but the optics are certainly not great.
In other markets:
- Spot gold is trading down $7.70 at $1831.20. For the week, the the price is up $14 after closing last week around $1817. The high price reached $1847.94 on Thursday. The low price was at $1805.78 on Tuesday.
- Crude oil is trading down $0.78 at $84.75. The high for the week reached $87.10 on Thursday the low was today at $82.78 before rebounding back higher into the close. For the week, the inventory data this week showed builds in crude and gasoline stocks.
In the US debt market,
- The 10 year yield reach day high of 1.902% on Wednesday. Last week the yield closed at 1.788%. The current yield is at 1.758% which is down three basis points from last week's close. The run to the upside earlier this week got the bears going in the stock market. Since peaking however, and coming down, the stocks have divorced themselves from the bond market as traders become more focused on how higher inflation will lead to a tighter Fed will turn lead to lower growth and lower stock prices.
- The two year yield is trading at 1.004% after reaching its Wednesday high at 1.076%. Last Friday the two year yield closed at 0.969% so yields are higher in that part of the yield curve.
For the day, the change in yields shows the following:
How did the volatility in the market play out in the forex market today?
The CHF and JPY attracted the safe haven money today, while the AUD, CAD and NZD so risk off flows exit those currencies. The USD was caught between those flows and is ending the session mixed.
Some technical levels in play for next week:
- EURUSD: The EURUSD had one quick look above it's falling 100 hour MA today. That MA comes in at 1.1348 (and moving lower). The price is just below it at 1.1342. For the week, the EURUSD is down from the last Friday closing level of 1.1414.
- GBPUSD: The GBPUSD moved closer to its 100 day MA today (at 1.3539). The low today reached 1.35446. Next week, that MA will be a barometer for buyers and sellers.
- USDJPY: The USDJPY held a swing low area between 113.58 and 113.629. The price is trading at 113.68 going into the weekend. The swing level will be its barometer for buyers and sellers in the new trading week.
- USDCAD: The USDCAD stretch to the highest level since January 11and also to the 38.2% retracement of the move down from the January high to the January low at 1.25871. The price currently trading at 1.2580, a few pips below that retracement level. Move higher in the new trading week would have traders looking toward the 100 day moving average at 1.26182. The price move below the 100 day moving average on January 11. A move back above give the buyers something to shout about.
- AUDUSD: The AUDUSD is trading near session lows for the week in what was an up and down week. The low price was reached on Tuesday at 0.7169. The high price was reached on Thursday at 0.7276. That was just short of its 100 day moving average at 0.7277. Yesterday and today, the price retraced nearly the entire move with the price low reaching 0.71709. Moving below the 0.7169 level would increase the bearish bias, while holding support could see a rotation back up (why not?)