Market Update – January 4 – USD & Tesla shine as Treasuries get hammered

Treasuries were hammered to kick off 2022 action as bond bears were in full control, making this the worst start to a year since 2009. Sentiment remains positive, as markets continue to buy into the recovery story. Apple breached the $3 trillion market capitalization mark and TESLA shares rallied +13.5% after block buster deliveries. Sarah Raskin rumoured to be FED Vice Chair for Supervision, suggesting a  tighter regime.

USD (USDIndex 96.30) rallied at US open from 95.50 lows. US stocks hit new all-time highs & Yields lept higher as US Treasuries were slaughtered. USOil dipped under $74.00 before recovering & Gold sank to $1800.
US Yields 10 yr rocked up to close at 1.62% and trade at 1.63% now   
Equities – USA500 +30 (+0.26%) at 4766, NASDAQ +1.2%; APPL +2.5%, FB +4.01%, ABNB +3.75%, PFE -4.06%, USA500 FUTS now 4795.     
USOil – slipped under $74.00 (rumours of 400k b/d production increase for Feb.) before recovering to $75.60 now ahead of OPEC+ meeting today.
Gold – spiked down under $1800 from $1831 on open and trades at $1805 now.
Bitcoin slipped again, down to 45,600, trades at 46,500 now.
FX marketsEURUSD under 1.1300 at 1.1285, USDJPY moves higher, testing  115.80, Cable back under key 1.3500 at 1.3470.

Overnight – Strong Asian Manu.PMI’s (led by China & JPY) suggest initial Omicron impact on Q4 may be limited. German Retail sales beat significantly (0.6% vs -0.2%)

European Open – The March 10-year Bund future is down -14 ticks, underperforming versus US futures, although they are also in the red. DAX and FTSE 100 futures are posting gains of 0.3% and 1.1% respectively, the latter outperforming in catch up trade, as markets returned from the extended holiday weekend. US futures are up 0.2 to 0.3% and it seems overall sentiment remains positive, as markets continue to buy into the recovery story, which is also underpinning a rise in yields.

Today – German Unemployment, UK Manufacturing PMI Final, US ISM Manufacturing PMI, US JOLTS, JMMC/OPEC+ meetings.

Biggest FX Mover @ (07:30 GMT) AUDJPY (+0.43%) Formed a base at 82.85 yesterday rallied on risk-on mood to 83.50  MAs aligned higher  MACD signal line & histogram higher & above 0 line. RSI 59 & rising,  H1 ATR 0.130 Daily ATR 0.76.

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Stuart Cowell

Head Market Analyst

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