1 Minute Market Rundown – 28th March 2022
Russia – Ukraine
Banks predict a more aggressive FED
Crypto looks to break out…finally
Markets currently have two themes. The first is the bond market which continues to trade as if it’s on the receiving end of a slap from Will Smith. Yields relentlessly push higher as the market continues to reprice an even more hawkish FED. News on Friday that both BofA and CITI are now calling for a number of 50bps hikes this year fuelled the market further. Just to clarify, a further EIGHT hikes are priced in for the rest of the year – it seems a lot but then again we thought five seemed a lot.
The yield curve continues to flatten with the 5s30s spread just 4bps away from an inversion while the 2s10s spread is now below 20. This does not paint a particularly good picture of things which nicely leads on to our second theme.
The second theme is that risk is quite clearly on. Despite the move in yields, risk sentiment has improved or at the very least the bulls have wrestled control for now. We spoke last week of how price action had started telling us risk was due a move higher and the move happened on Friday and over the weekend.
Crypto has pushed higher and is now flirting with the resistance levels of the ranges that have contained it for what has felt like a very long time. At time of writing it is trading just shy of $47k having traded up to $47,500 earlier. BTC (and the wider crypto market) is being fuelled by a broader rally in global assets as well as more crypto specific news. Headlines that Terra intends to increase its BTC holdings to $3bn over time are also providing support. Worth noting that the move overnight however was on very little volume so we wouldn’t be attributing the Terra flow as the reason for the overnight move but more it should continue to keep BTC supported on dips. ETH and others have also followed suit and are looking to break out of their ranges. Crypto has been on a decent run of late and it wouldn’t be surprising to see it consolidate and even see some profit taking soon. We continue to remain long and will be looking to buy dips toward $45k on the day. ETH faces resistance at $3500 and $3700 beyond.
Equities, in line with the more improved risk sentiment, continue to push higher and will look to take out the 100 DMA on the day barring a disaster. A break and hold above should give global risk assets further support.
In FX, USD/JPY continues to benefit the most from the improved risk sentiment and the continued move higher in US yields. Elsewhere, the USD does remain somewhat bid against the EUR and GBP. We continue to see value elsewhere and remain light in FX positioning. Tomorrow is value date month end and Thursday month end so moves could be a little wild.
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This update: 14 Oct 2020
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