STATE OF THE MARKETS
Yields rise amid big tech sell-off. All major US stocks indexes closed in the red on Monday, with more than 2% drop for Russell (-2.59%) and Nasdaq (-2.55%), while S&P (-1.04%) and Dow (-0.10%) was not spared either after investors sold off big tech names like Apple (AAPL), Microsoft (MSFT), Intel (INTC), Alphabet (GOOGL) and Facebook (FB) following downgrades by Citigroup. Flight to safe-haven, left less demand for bonds that saw the benchmark 10Y yield regained the 1.60% mark.
Crude futures closed below $65/bl and trending lower as of this writing, after concerns over demand outlook overweight the weekend shutdown of a major US pipeline due to cyberattack. Gold and the Greenback were trading relatively flat, after a dismal report on the NFP Friday. Gold settled firmed above $1,835/oz as New York closed.
In the FX space, Dollar (DXY) was firmed above the 90.20 mark, as growth stocks liquidation continues, though remains on offer for the medium and long term accounts after NFP failed to rejuvenate Dollar strength. Sterling, Loonie, Swiss and Kiwi lead the demand across the board, while Yen was seen synching across all horizon. Euro and Aussie remain on offers for most of the sessions.
OUR PICK – USD/JPY
Dismal NFP and stocks rout may trigger Yen rally. Latest CFTC report showed that the last three weeks have seen USD net short increased once again, while Yen net short reduced significantly; signaling a continued selling in USD/JPY as long as the exchange rate remained below ¥109.80. Monday’s tech stocks sold off might also signaled that investors are nervous after world’s largest sovereign wealth funds, Norges Bank’s 2021Q1 13F reported zero US equities holdings, which is very rare. The VIX spiked 2.97 (+17.80%) points and closed above Jan 2020’s close (18.84). Any close above 19.50 points signaled an initial uptrend, which may mean continued risk-off.
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