On Friday, the market moved synchronously in favor of the dollar. Gold broke through the lows on November 30 and consolidated below $1,760 per troy ounce. The Bloomberg Commodity Index, which consists of 23 commodities, decreased the most since April, as the dollar’s strength reduced the interest in commodities valued in that currency. Meanwhile, last week, a spike in US government bonds yield heightened fears that the accelerating inflation could weaken the support of the monetary policy. Against this backdrop, the stock prices happened to be under pressure. The S&P 500 fell to a fresh low on February 23.
No one expected such a rapid collapse of bonds in the market. The general picture of the situation is more associated with panic selling. Investors are concerned that accelerated inflation could trigger a reduction of stimulus from central banks, although the Fed emphasizes that there are no plans to tighten the policy prematurely.
Oil showed its resilience at the opening of the week, rebounding from its lows on February 24 shortly before the key OPEC+ meeting, at which some proposals could stop the trend. Brent oil rose above $65.50 p/b again after decreasing by 3.2% on Friday. The alliance will hold a meeting on Thursday.
The credit market is showing a rebound. Bond prices are correcting after last week’s nosedive. Nevertheless, the profitability remains high. German Bonds are at -0.31%, which is June’s maximum of the last year. Last week, these securities were able to reach the level of -0.20%, which is the best result since December 2019.
US Treasuries decreased to 1.40% after hitting 1.61% last week. 2-year bonds returned to their previous range at 1.13% after a sharp spike to 1.19%. At the same time, the Fed’s futures contracts for an increase in rates remain unchanged.
Main market quotes:
- S&P 500 (F) 3,854.38 +45.13 (+1.18%)
- Dow Jones 30,932.37 -469.64 (-1.50%)
- DAX 13,967.35 +181.06 (+1.31%)
- FTSE 100 6,604.43 +121.00 (+1.87%)
- USD Index 91.028 +0.146 (+0.16%)
Important events:
- China Caixin Manufacturing PMI (Feb) at 03:45 (GMT+2)
- Germany Manufacturing PMI (Feb) at 10:55 (GMT+2);
- Eurozone Manufacturing PMI (Feb) at 11:00 (GMT+2);
- UK Manufacturing PMI (Feb) at 11:30 (GMT+2);
- US ISM Manufacturing PMI (Feb) at 17:00 (GMT+2).
