Original insights into market moving news

[PODCAST] European Open Rundown 12th February 2021

  • Asian equity markets were subdued in holiday-thinned trade and following a mixed lead from Wall Street
  • In FX, the DXY attempted to recoup some lost ground, EUR/USD maintains 1.21 status, GBP/USD retreated below 1.38
  • WTI crude futures retreated beneath USD 58.00/bbl and snapped an 8-day winning streak. Gold flat
  • Italy 5SM members voted to support a Draghi government
  • Looking ahead, highlights include UK GDP, Uni. of Michigan, Fed's Williams


US COVID-19 cases +97,309 (prev. +91,034), deaths +3,645 (prev. +2,806); vaccines administered 46.4mln (prev. 44.8mln). (Newswires)

US President Biden announced his administration secured 200mln additional vaccine doses which includes 100mln from Pfizer (PFE) and 100mln from Moderna (MRNA), while he added that US is on track to have enough vaccines for 300mln doses by end-July. (Newswires/Washington Post)

UK COVID-19 cases +13,494 (prev. +13,013), deaths +678 (prev. +1,001); vaccines administered 13.51mln (prev. 13.06mln). There were also reports that UK social distancing rules could remain until Autumn. (Newswires/The Times)

UK Government Ministers will today discuss a Cabinet Office proposal to implement vaccine and testing certificates when international travel is allowed to resume. (Sky News)

Australia's Victoria State Premier Andrews announced to impose stage 4 restrictions from midnight for 5 days and said there are currently 19 active COVID-19 cases in the state. Andrews stated the UK strain is challenging the Victoria Stay Open status and they must assume there are further cases in the community, while he also stated that masks must be worn everywhere in the state and this is a short and sharp circuit breaker. (Newswires)

New Zealand PM Arden said the first batch of the Pfizer (PFE) and BioNTech (BNTX) vaccines are expected to arrive next week, ahead of previous expectations. (Newswires)

Japanese Economic Minister Nishimura said Japan will maintain the state of emergency in 10 prefectures. (Newswires)


Asian equity markets were subdued in extremely thin trade with most regional bourses closed for Lunar New Year and following continued indecision on Wall Street, where stocks finished mixed with a slight positive bias after meandering around record levels once again in the absence of any meaningful catalyst to spur price action. ASX 200 (-0.5%) was lower as underperformance in mining-related sectors and cyclicals pressured the index, with sentiment also dampened by a fresh lockdown in Victoria state where state Premier Andrews announced the imposition of stage 4 restrictions for 5 days after an increase in the cluster of cases at a Melbourne hotel. Nikkei 225 (-0.4%) exhibited some post-holiday blues on return from yesterday’s National Day closure and amid reports of a looming extension to the state of emergency. Participants also mulled over the recent spate of mid-cap earnings although the losses in the broader market were cushioned by a predominantly weaker JPY. India's NIFTY (+0.1%) fared slightly better with the index kept afloat with mixed corporate results keeping stocks in the balance, while China, Hong Kong, South Korea, Taiwan, Singapore, Philippines, Malaysia, Indonesia, Thailand and Vietnam were all closed for holiday. Finally, 10yr JGBs were rangebound following recent pressure in T-notes which pulled back from a brief incursion into 137.00 territory and with the lack of BoJ purchases in the market today also ensuring price action remained uneventful.

White House said a review of China tariffs and trade policies is ongoing and stated that President Biden expressed concern over a lack of transparency on COVID-19 in his call with Chinese President Xi. (Newswires)

US State Department said US has concerns about activities of China’s Communist Party including Confucius Institutes and has profound concerns with China's predatory behaviour when it comes to technology, while it added the US is committed to deepening ties with Taiwan. (Newswires)

White House is reportedly reviewing the US ban on Tencent's WeChat, according to reports in FT. It was also separately reported that Huawei is to seek a court order in UK to access HSBC (HSBA LN) records in an effort to clear its CFO. (Newswires/FT)


BoE's Haldane said UK economic recovery should be one to remember following a year to forget, while he expects a spending boom once COVID-19 restrictions are removed and sees 'accidental savings' to be around GBP 250bln by June. (Daily Mail)

UK Chancellor Sunak was warned that a hike to fuel duty in next month's Budget would be a blow to the north of the country. (The Sun)

EU's Sefcovic said he had a constructive meeting with UK Cabinet Minister Gove. It was also reported that Britain and EU reiterated in a joint statement their full commitment to Good Friday Agreement and proper implementation of the protocol, while they will spare no effort to implement solutions mutually agreed in December. Furthermore, they will intensify work of the specialized committee on the protocol to address all issues and will convene the joint committee no later than February 24th. (Newswires)

ECB's Weidmann said higher taxes should push Germany's inflation to above the ECB's target by year-end and that German harmonized CPI should increase to more than 3%. (Newswires/Augsburger Allgemeine)

Italy 5SM members voted to support a Draghi government. Draghi is now expected to meet with President Mattarella and formalise his appointment as PM whilst presenting his list of ministers; government is expected to be sworn in on Saturday. (Newswires/Politico)


In FX markets, the DXY attempted to recoup some lost ground and flirted with the 90.50 level but with upside limited following the indecisiveness during Wall St trade and after the latest jobless claims data which printed slightly higher than expected and contained upward revisions to the prior readings. Furthermore, there were comments from Fed’s Barkin who anticipates strong consumer demand in the upcoming seasons even without herd immunity and participants now look ahead to the G7 Finance Ministers meeting which Fed Chair Powell and US Treasury Secretary Yellen will attend. USD-counterparts were marginally softer with EUR/USD testing yesterday’s support at 1.2120 and which follows recent pessimistic central bank rhetoric including ECB's Makhlouf who noted the global economic outlook has deteriorated and is more uncertain in the near term, while ECB's De Guindos suggested that H1 2021 will be worse than expected although sees a "significant" rebound in the eurozone economy for H2. GBP/USD retreated below the 1.3800 handle with reports suggesting UK social distancing rules could remain in place until Autumn and although there were comments from BoE’s Haldane, who expects a spending boom once COVID-19 restrictions are removed with 'accidental savings' to be around GBP 250bln by June, this failed to garner any reaction. USD/JPY was driven by the firmer greenback and antipodeans were pressured with AUD/USD subdued by the uninspiring risk tone and following the fresh lockdown announcement in Australia’s 2nd most populous state.

Mexican Interest Rate (Jan) 4.00% vs. Exp. 4.0% (Prev. 4.25%); decision was unanimous. Bank of Mexico stated that balance of risks for the projected trajectory of inflation is uncertain and expected paths for headline and core inflation within the forecast horizon are similar to those foreseen in the last quarterly report. Bank of Mexico stated that the economic outlook is uncertain and has downside risks, while monetary policy implementation will depend on the evolution of the factors that have an incidence on headline and core inflation, on their foreseen trajectories within the forecast horizon and on their expectations. Furthermore, it added the Governing Board will take the necessary actions based on incoming information in order for the policy rate to be consistent with the orderly and sustained convergence of headline inflation to the 3% target within the time frame in which monetary policy operates. (Newswires)


WTI crude futures retreated beneath USD 58.00/bbl and snapped an 8-day winning streak amid the uninspired risk tone and following the recent OPEC and IEA monthly oil reports whereby the former lowered the world oil demand growth forecast by 100k bpd due to lockdowns in several countries, although the IEA report maintained its world oil demand growth forecast at 5.4mln bpd. Gold prices were unchanged with the precious contained as the greenback attempted to nurse some of its losses, while copper flatlined amid lacklustre overnight trade across risk assets and absence of most participants in the Asia-Pac region for the Lunar New Year.

DoE reportedly offered up to 10.1mln bbls of crude from SPR as part of its mandatory requirement to sell 10.1mln bbls in 2021. (Newswires)


US Secretary of State Blinken had a call with South Korean Foreign Minister Chung and pledged to enhance strength of US-South Korea alliance, while Blinken also highlighted the need for denuclearization in the Korean peninsula. (Newswires)

Turkish Presidential spokesman said Turkey will not turn back from the Russian S-400 systems and that nobody should expect quick solutions to issues with the US but talks will be held. (Newswires)


USTs were offered after a disappointing 30-year auction brought yields to session highs, offsetting earlier strength. By settlement, 2s -0.2bps at 0.111%, 10s +0.8bps at 1.160%, and 30s +2.5bps at 1.949%; TYH1 volumes were lacklustre; 5yr TIPS -1bps at -1.916%, 10yr TIPS +2.5bps at -1.036%, and 30yr TIPS +4.2bps at -0.197%. Yields began slowly grinding higher as US trade got underway - seemingly detached from the flow-driven stock selloff and disappointing Claims data - as dealers were on the offer ahead of the auction; the Treasury announcement for next week's auctions of USD 27bln in 20-year bonds and USD 9bln in 30-year TIPS supported the concession. Ultimately, the dealers efforts were not quite enough after the USD 27bln offering was not taken down so well: tailed by 1bps and covered less than average, although participation from the non-dealer community was more or less in-line with average, with direct bidders (proxy for domestic) picking up the tab for lacklustre indirects (proxy for international), similar to Wednesday's 10-year offering. The sloppy auction saw immediate further downside in duration, with chunky block sales going through from TY out to US, providing a more bearish outlook and perhaps a signal of participants still not happy to step back in at these levels; next week's auctions will provide a more complete view on duration appetite. T-note (H1) futures settled 2 ticks lower at 136-27+.

Fed's Barkin (voter) said the economy doesn't need herd immunity to rebound and sees strong consumer demand for spring and summer even without herd immunity, while he added that business spending on travel and conferences may take longer to recover. (Newswires)

Fed's Harker (non-voter) said he expects a bit of an inflation spike, but not roaring past 2%. (Newswires)

US President Biden's team is working aggressively on the semiconductor shortage and is working to identify supply chain choke points, while the chip shortage will be a key issue in an upcoming executive order, according to an official. (Newswires)

White House said Senators meeting on infrastructure was productive and agreed the US needs to build across urban and rural areas to create jobs and support the economy. In other news, President Biden is expected to conduct a meeting with a bipartisan group of governors and mayors at the White House today for discussion on COVID-19 aid. (Newswires)

Federal prosecutors and regulators are reportedly investigating whether market manipulation or other types of misconduct fuelled the rise in prices of stocks such as GameStop (GME) and AMC Entertainment (AMC), according to WSJ citing sources. (WSJ)