Original insights into market moving news

[PODCAST] European Open Rundown 17th February 2021

  • Asia-Pac equity markets traded mostly lower after the lacklustre handover from Wall Street
  • US Treasury yields printed fresh cyclical highs with the 10yr currently circa 1.3%
  • US President Biden said every American who wants a vaccine will receive it by the end of July
  • In FX, the DXY was choppy overnight, EUR/USD and GBP/USD remain sub-1.21 and 1.39 respectively
  • WTI crude futures hovered around the USD 60/bbl level. The winter storm stateside is said to have hit US oil output by as much as a third
  • Looking ahead, highlights include UK CPI, US PPI, Retail Sales, Industrial Production, Canadian CPI, FOMC Minutes, Fed's Rosengren, Kaplan, BoE's Ramsden, supply from the UK, Germany & US


US COVID-19 cases +56,384 (prev. +88,193 on Sunday), deaths +1,217 (prev. +3,317 on Sunday); vaccines administered 55.2mln (prev. 52.9mln on Sunday). (Newswires)

US President Biden said every American who wants a vaccine will receive it by the end of July, while he noted that Pfizer (PFE) and Moderna (MRNA) have sped up their delivery schedule under the Defense Production Act. (Newswires)

UK vaccine task force head said every adult in the UK could have both doses of the vaccine by August or September. (Sky News) The UK's lockdown is unlikely to be eased until UK COVID cases are in the hundreds (currently over 10k per day). Additionally, PM Johnson's plan is unlikely to commit to a clear timetable in the coming months and instead promise a series of reviews. (Telegraph) NHS Test and Trace is forming plans that would see a "surge" in testing in which, over 400k rapid lateral flow tests would be sent to homes and workplaces every day. (Times)

Some COVID-19 vaccine makers are reportedly having difficulties sourcing supplies of giant plastic bags used in the manufacturing process; with manufacturers being within days of stalling production as a result according to sources. (FT)

Australia's Victoria state Premier confirmed to ease COVID-19 lockdown restrictions in the state from today and it was also reported that New South Wales will start its vaccine rollout on Monday. Elsewhere, New Zealand PM Ardern announced Auckland restrictions will be eased to level 2 from Thursday and the rest of the country will move to level 1, while she added they will review it again on Monday and that New Zealand does not currently have a widespread outbreak. (Newswires)


Asia-Pac equity markets traded mostly lower after the lacklustre handover from Wall Street where the major indices finished mixed and retreated from fresh intraday records as the rising yield environment provided a headwind for stocks. ASX 200 (-0.5%) was negative with underperformance in gold miners after the precious metal retreated beneath USD 1800/oz and consumer staples were also pressured by declines in supermarket operator Coles despite posting profit growth in H1, as it warned sales in the sector could moderate significantly or even decline in H2 and beyond. However, the losses in the broader market were cushioned as participants digested a slew of mixed results including a jump in Westpac profits which boosted shares in the big 4 lender and with some slight encouragement from the announcement to lift the 5-day snap lockdown in Victoria state. Nikkei 225 (-0.4%) conformed to the subdued mood after reports suggested the government was not planning to lift COVID-19 emergency measures and following mixed data in which Machinery Orders showed surprise growth for December but Exports and Imports in January missed estimates, while KOSPI (-0.8%) suffered after domestic COVID-19 cases rose to the highest since early January following the Lunar New Year holiday. Conversely, Taiwan’s TAIEX (+3.3%) surged as it played catch up to the recent global advances on return from its 11-day closure and the Hang Seng (+0.8%) shrugged off early losses to extend on its best levels since early 2018 amid Hong Kong IPO optimism for this year and ahead of the return of mainland participants tomorrow. Finally, 10yr JGBs continued to weaken on spillover selling from USTs and with domestic yields tracking stateside counterparts which earlier rose to fresh cycle highs, while the absence of BoJ purchases in the market also contributed to the lack of demand for Japanese government bonds.

US President Biden said there will be repercussion for China concerning human rights abuses. (Newswires)

  • Japanese Machinery Orders (Dec) M/M 5.2% vs. Exp. -6.2% (Prev. 1.5%)
  • Japanese Machinery Orders (Dec) Y/Y 11.8% vs. Exp. -3.0% (Prev. -11.3%)
  • Japanese Trade Balance (JPY)(Jan) -323.9B vs. Exp. -600.0B (Prev. 751.0B, Rev. 749.6B)
  • Japanese Exports (Jan) Y/Y 6.4% vs. Exp. 6.6% (Prev. 2.0%)
  • Japanese Imports (Jan) Y/Y -9.5% vs. Exp. -6.0% (Prev. -11.6%)


UK Chancellor Sunak is reportedly mulling reducing national insurance contribution from employers in the March budget and reinstating the GBP 1,000 job retention bonus for every worker that employers bring back from furlough. (The Sun)

US Treasury Secretary Yellen held a call with ECB's Lagarde in which they discussed support for strong global recovery, financial stability and climate change, while Yellen emphasized deeper transatlantic cooperation on economic and fiscal issues. Furthermore, Yellen commended the swift and decisive policy measures by the ECB regarding the pandemic and discussed tools to nurture growth and create jobs in both US and Europe. Yellen also held a call with European Commission's Dombrovskis in which she stressed the importance of cooperation on the pandemic, supporting global recovery, combatting income inequality and climate change. (Newswires)


In FX markets, the DXY was choppy overnight although held on to most the prior day’s gains due to firmer yields which reached fresh cycle highs and the cautious mood in stock markets. Furthermore, recent data was encouraging with the Empire Manufacturing Survey higher than expected and there were also several Fed speakers although none of the rhetoric was ground-breaking with Fed’s Bowman stating that the Fed will maintain accommodative policy until goals are met and the economy has a long way to go, even with a pickup in H2 of this year, and Fed’s Bullard suggested there is no reason to get ahead of ourselves regarding tapering. EUR/USD languished below 1.2100 after the single currency was hit by the recent advances in USD while GBP/USD traded sub-1.3900 but is off worse levels after recovering from support near the prior EU session lows. USD/JPY retraced some of the recent rate differential driven advances to give back the 106.00 status and antipodeans were indecisive with attempts to nurse losses mired by the cautious risk tone.


WTI crude futures choppy around the USD 60/bbl level as the pressure from the lacklustre risk appetite was offset by the effects of the winter storm stateside which is said to have hit US oil output by as much as a third. Furthermore, power disruptions persist in Texas where authorities warned of potential fuel shortages for parts of the state and neighbouring Oklahoma state is said to have adopted emergency rationing rules on natgas. Gold remained subdued after its slide beneath the USD 1800/oz level with the precious metal hampered as the USD held on to recent gains and copper plateaued at multi-year high with advances halted by the cautious overnight mood.

US oil production reportedly dropped by a third amid the winter storm and it was also reported that Texas warned fuel shortages are developing in the western half of the state, while Oklahoma state reportedly adopted an emergency rule concerning rationing of natgas. Reports also noted that Houston power outages could persist for several more days and the Houston shipping channel was closed to all traffic amid the extreme weather. Furthermore, Exxon (XOM) said staff at the Beaumont refinery (366k bpd) were working to restore normal operations after a unit upset due to weather conditions, while Marathon's El Paso refinery (131k bpd) reported an unplanned shutdown of its process unit due a malfunction of equipment amid extremely low temperatures. (Newswires)

US total shale regions oil production for March seen -78k BPD at 7.503mln BPD (prev. view -90k BPD in Feb), according to industry experts. (Newswires)

Russian February oil output is said to be beneath its OPEC+ quotas due to colder weather conditions. (Newswires)


UN nuclear watchdog said its chief has offered to travel to Iran to find an agreeable solution for the agency to continue essential verification work. (Newswires)

US Secretary of State spokesman said the US reserves the right to respond to the Iraq rocket attack in partnership with Iraqi partners but added it would be premature to speak about a retaliation to the rocket attack in Iraq before we knew what occurred. (Newswires)

US special envoy to Yemen said Iran must stop lethal support for Houthis, while it was earlier reported that US called on Houthis to stop its advance on Marib and cease all military operations whilst turning to negotiations. In separate news, the White House will help Saudi Arabia with self defence needs and express differences where necessary, while reports added that the US is to recalibrate relations with Saudi Arabia. (Newswires)


Treasury yields were printing fresh cyclical highs as traders returned from the Presidents' Day market holiday, improving rate differentials in favour of the USD, leading the buck to appreciate to the detriment of other major FX; EUR, for instance, had a brief move under 1.21, while USDJPY rose back above its 200dma around 105.50, and there weren't many green flashes in EMFX. The move higher in yields also provided headwinds to the equity complex, seeing the ES fall away from the 3950 area where it had been perched; while cash equities saw fresh record highs after the open, the rise in yields eventually dragged on these markets too. Recently, banks have warned that a sharp rise in the USD or Treasury yields had the capacity to knock equities, and that appears to be what we have been seeing today. Some CTA short-covering and concession ahead of 20-year supply might have been in play too, desks said; it is notable that earlier in the session, when the move higher in yields was triggered, market-based inflation gauges were actually narrower on the day, suggesting that the move may have been a function of something other than the reflation trade (these gauges did catch up to the Treasury moves later in the session, it’s worth adding). T-note futures (h1) settled 24+ ticks lower at 135-25.

Fed's Daly (voter) said unwanted inflation is not a practical risk right now and pressures on inflation are now downward, while she suggested we should be less fearful about inflation around the corner as that fear costs jobs. (Newswires)

Fed's George (non-voter) said changes in housing and office patterns in the pandemic could lead to stress in real estate markets and that official support has kept real estate finance constrained, but that could change as pandemic aid expires. Fed's George added the outlook is pretty optimistic for H2 but risks include logistics around the vaccination programme, while she noted that asset purchases will continue until the economy is "through this critical phase" and that debate on bond purchases will start when it is clear that the Fed is on track to meet its goals. (Newswires)

US President Biden said we will be better off in September than we are currently and reiterated that bigger is better right now in regards to stimulus, while he added that the key to raising minimum wages to USD 15/hr is moving gradually and that he is prepared to write off USD 10k in regards to student debt but not USD 50k which he doesn't think he has the authority to do so. (Newswires)