PVM Friday bits / FED's Harker & Bostic / UST 10y yields 1.08 / USD signs-risk of a turn



“Like all Americans I am outraged by the violence, lawlessness, and mayhem,” Trump said on the attack on Wednesday that shocked the U.S. and the world..

He added that he would focus on a smooth transition....finally


- Fed's Bostic says bond-buying 'recalibration' could happen in 2021

- Fed's Harker - Expects significant slowdown in Q1 GDP - Could even be negative - Recent $900bn fiscal aid deal should help buoy the US economy.The problem with the fiscal comment is that it's still firefighting aid, not growth inducing stimulus. Harker says could see bond tapering late 2021, Adding it could disrupt markets if done too soon. Will keep bond buying steady until really see economy healing

- French goods won’t get hit by US tariffs for now. The 25% levies on imports like cosmetics and handbags, due to take effect on Jan. 6 in retaliation against a French digital services tax, have been suspended indefinitely.

- Facebook's Mark Zuckerberg - we believe risks of allowing president Donald Trump to continue to use our service during this period are simply "Too great"… Facebook, Instagram Will Extend Block On Trump Accounts "Indefinitely", Pelosi and Schumer want the cabinet to throw out Donald Trump by invoking the 25th Amendment, President Trump has now pledged an orderly transition, Brisbane will enter lockdown after a single case of the virus

- Markets :

- USD showing signs of turning – as discussed many times last few days, positioning is pretty short (see below comments and EURUSD chart) – some FED’s talking ‘’taper’’ towards end of 2021/early 2022, others don’t to be honest, but clearly would matter greatly (seems rather unlikely for next many months, but it’s the intent). EURUSD topped 1.2300+, below 1.2240 area risk lower, USDCHF would need 0.8900+ to change trend, USDJPY 104.20+, USDZAR turned early in EMG land /big covid cases etc), USDMXN broke through Dec low early this week but right back 20+, AUDUSD still up here though as risk/equities higher, GOLD topped $1950, Silver topped same time $27.50….all as UST rates actually finally moving higher, 10y UST now 1.08 (real rates..) – having said all this some looking for a negative print on NFP this afternoon..

- WTI on highs though still

- Equity markets really enjoying life as we kicked off 2021 - though do watch out if the USD was to really correct a few pct – it may put a bit of pressure on equity markets – although again massive moves within various sectors.. markets notoriously volatile in early part of the year – narrative can change on a dime. QQQ fairly impressive! Considering move in rates, though to be honest not great in the grand scheme of things (yet anyway)

- UST curve steepening – all as expected on Biden sweep – many hoping though that FED does YCC, if they don’t…this move could have legs..IF, still a big if clearly, they were let to steepen further – this will continue to have big implications going forward in 2021 and beyond – recal Central Bank expectations in earlier email this week – all VERY low for next few years…

- January markets always throw some high vols/unexpected turns, given massive positioning in quite a few things, this year should be no different, usually favorite recent positioning get challenged (like short usd – clearly became a consensus lately, as discussed few times recently)


https://www.reuters.com/article/us-usa-fed-bostic-idUSKBN2992GI Fed's Bostic says bond-buying 'recalibration' could happen in 2021


Moderna aiming to make up to 1 billion doses of COVID-19 vaccine this year http://reut.rs/3nlV5Iy

New study suggests Pfizer coronavirus vaccine protects against a mutation in variants that erupted in Britain and South Africa. https://apnews.com/article/international-news-coronavirus-pandemic-coronavirus-vaccine-3094dd3cc91b4a20780402476cdcb5ae

UK researchers developing world's first Covid vaccine patch https://cityam.com/?p=1532329


https://www.cnbc.com/2021/01/07/shipping-giant-and-marine-energy-firm-to-scope-wave-and-wind-projects.html?utm_term=Autofeed&utm_medium=Social&utm_content=Intl&utm_source=Twitter#Echobox=1610091927 Japanese shipping giant partners with marine energy firm to scope hybrid wave and wind projects – personally always wondered why the world has not got there earlier on this kind of energy..





Higher rates – Taper tantrum ? (although a move towards 1.10-1.20 10y UST yields was always expected on a Biden sweep..)



Energy, OIL, mining related stocks had some pretty big rallies of late – again all fairly Biden related..as expected


EURUSD – trend with RSI’s diverging – beware if you short usd (other charts look similar..)


The dollar is up...and shorts are at decade extremes

Fundamentally everybody we speak to remains a dollar bear. This trade has worked well ever since the Fed March panic and the long term logic remains intact. Despite all the new negative 2021 dollar notes we are reading, the green back has not continued lower. The DXY is basically trading at mid December levels.



GOLD & Silver topped at same time around $1950 and $27.50



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