Public holiday in the U.S., little action in the markets – Market Overview

By: Miguel A. Rodriguez

15:40, 15 February 2021

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Today is the President's Day in the U.S., and this will be noticed in the market activity due to the non-participation of North American players and the lack of relevant economic data.

In Europe, the session begins with a continuation of positive risk sentiment that we have already witnessed for much of the previous week.

The U.S. sees rebound in yields.

As an example of this, the rebound in the American treasury bonds' yields proved to be significant. For instance, Tnote10 increased five basis points to the 1.21% zone, a level not seen since March of last year, just when the Federal Reserve started its interest rate cuts to zero. Tbond30 also added to this rise in yields, reaching the 2.01% zone, a level it had previously hit before the start of the pandemic.

These increases in yields result from outflows of an asset that is considered a refuge in times of crisis and economic uncertainty and therefore reflect a better investor risk sentiment driven by the advance in vaccination worldwide and the much-awaited $1.9 trillion fiscal stimulus package in the U.S.

Japan stock market surges.

These expectations contribute to stock indices reaching new all-time highs day by day, but not only in the United States. In Japan, a country where the pandemic's impact seems to have been less critical than in the rest of developed countries, the GDP figure for the fourth quarter showed a growth of 12.7% against an expected figure of 10.1%. The Japanese prime minister has also unexpectedly declared that his government continues to closely monitor the exchange rate's evolution.

The Japanese stock index reached new highs not seen since 1990, and the USD/JPY has strengthened to the 105.40 area. Technically, the pair needs to break above the 105.50 level, the main resistance where the 200-day SMA line passes, to confirm the recovery and activate a reversal pattern of the current downtrend that would have its theoretical objective the levels around 108.60.

Sources:  Investing.com, Forexlive.com.

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