In the Know

In the Know

By 1 April, 2021 No Comments
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1 April 2021

Brief
Biden’s plan to invest USD2.3 trillion in infrastructure didn’t move market, and investors start to analyze the negatives, ie the tax increase to pay for. A chunk of data from the Eurozone will be closely monitored today: stocks are at highs while the EUR remain depressed on fears of a new infection wave in the region.
Precious metals start to benefit from inflation trend spur by the new stimulus plan, but there is plenty of resistances to be broken before resuming uptrends. On top, the USD remains well bid.

Agenda
 
Thurs:    EU, UK and US Manufacturing PMI.
Fri:         UK and US Holiday, US Unemployment Rate.

Rates
Euroland

A chunk of data today can offer more clues on the state of health in the regions: Germany’s retail sales, France’s trade balance, manufacturing PMI and preliminary Russian GDP.
Fears of a new wave of inflections, with France starting 3rd and severe lockdowns, keep the EUR depressed at USD 1.17 and GBP 0.85.
Bond future are sold, but guess that more on equity strength than inner factors, as the EUR doesn’t follow the relative higher yields.
Stocks are expected to open mixed after trading at all time highs or at the verge to break last resistances

United Kingdom

The Gilt continue sliding down, with investors pricing the good vaccination rate. Indeed, the flow doesn’t benefit stocks in full, as it used to be. The FTSE is reticent to break out its last resistance with conviction and remain below. Futures point to a red opening today.
The GBP stops its uptrend and doubt about the direction to be taken now.

United States
Biden requested the Congress to pass the USD 2.3 trillion infrastructure plan. Indeed, the news was not a surprise and investors did not react to it. Focus now in the tax hike included in the plan, which could even create a headwind.
Today weekly jobless claims and some manufacturing and construction data will be followed.
UST yield
remains stable at 1.73% despite job additions jumped by 517k led by a reviving leisure and hospitality industry.
Speculations that the acquisition of GlobalLogic by the Japanese Hitachi for USD 9.6 billion could be behind USD strength.
Stocks
rise slightly lifted by tech and closing the best month since November. Industrials did not benefit from the Biden’s plan, as seems increased funding has been priced in already.

Credits

Microsoft wins US Army contract for augmented reality headsets worth up to USD 22 billion.
After a good chunk of new issues yesterday, there is none today, heading for Eastern weekend.

Commodities
Crude future retraces from USD 62 to 59 ahead of the result of the OPEC+ meeting. Expectations are that they would yield output constraint by gradually increase it.
Probably big decisions will be delayed to the May meeting.
Gold price tick higher on expectations that the giant new stimulus will definitively spur inflation in the US. Indeed, precious metals are just finding its support and rebound from there, but it can be considered a technical move for the moment. There are plenty of resistances to be broken before resume any meaningful uptrend.

Best regards