Markets Tread Water – All the Good News Baked In?

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Equities and FX flat
US Retail Sales on tap
Nikkei -0.62% Dax -0.39%
UST 10Y 1.11
Oil $52
Gold $1854/oz.
BTCUSD $38000/oz.

Asia and the EU
No Data

USD US Retail Sales 8:30
USD PPI 8:30

It’s been a quiet night of trade in both FX and equities with markets range bound for most of Asian and early European trade in the wake of President Biden’s stimulus announcement plan.

The price action has all the feel of sell-the-news dynamic as risk assets rallied strongly in anticipation of the news and now appear to have stalled as traders look for fresh catalysts to drive price action.

The eco calendar today carries US Retail Sales and PPI data. Markets are looking for a rebound in the control group to 0.2% from -0.5% the period prior. Retail sales have missed forecasts for the last 3 out of 4 months and given the uptick in unemployment claims chances are good that Retail Sales may come in weaker than expected.

The state of consumer demand remains precarious especially at the low end of the income scale as the limit to unemployment benefits and the raging COVID pandemic are likely to add fresh pressures to an already fragile situation which is why the stimulus package looms so large. But relief may take several months to be put in place and in the meantime the cold hard reality of slowdown in growth could finally hit investors triggering profit taking in risk assets.

Nasdaq has made several attempts to run the 13,000 level but has failed to hold it suggesting that speculative fever may be waning and if the market sells off into the weekend today it may start a short term reversal as longs begin to lock in their gains.

Boris Schlossberg
Managing Director

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