Market Commentary – January 14, 2021

Kevin Jock

14th January 2021

    As Treasury yields pare off recent gains following consecutive days of strong auction demand for government debt. Wall Street’s unease settled with indices resuming their upward trajectory despite the U.S. house historically voting to impeach President Trump a second time. A single article of inciting insurrection has been approved however Senate Majority Leader McConnell signalled trial will not proceed until after Joe Biden’s inauguration, ensuring Trump serves his full presidency. Fed member Lael Brainard further reassured jitters yesterday that the central bank has no considerations to start tapering off its bond purchasing program this year.

    European indices managed to notch higher after Francois Villeroy said the ECB will continue its super accommodative policies for as long as needed. Though investor mood is still mired by elevated COVID-19 daily infection rates prolonging social restrictions. Meanwhile, the U.K. was hit with most deaths in one day dragging the FTSE100 eleven index points lower.

    One step forward, two steps back for the U.S. administration as they retracted plans to ban American investment in Chinese tech giants like Alibaba, Baidu and Tencent. Welcoming news for the Hang Seng, gapping 0.6% but lost ground throughout the session. Declassified documents revealed the U.S. had strategized in 2018 to counter China’s rising dominance via better relations with India and Taiwan. Elsewhere, Australia and Japan surge 0.5% and 1.8% fuelled by overnight rumours Biden is considering a further $2tn in relief aid. The BOJ also reaffirmed their readiness to expand monetary policy should the pandemic worsen.

    The U.S. dollar index continue to rebound defying retreating yields, gold falls back below $1,850 and oil slips lower on profit taking. Despite bitcoin clawing back to 37,000 following a turbulent week, the spike in volatility has renew lingering doubts the cryptocurrency’s adoption as a mainstream asset.


Figure 1 (Source: IS Prime): Nikkei Weekly : Since November U.S. elections, the Nikkei has surged a record 25% as investors anticipate improving trade ties would fuel prospective growth.

Headliner to Review

  • In the United States last December, the average weekly real wage of private non-farm employees maintained a monthly increase of 0.1%; the year-on-year increase further accelerated to 4.9% (previous figure increased by 4.7%)
  • Driven by the 8.4% monthly increase in gasoline prices, the US consumer price index (CPI) increased to 0.4% month-on-month after the seasonal adjustment in December last year (previous figure rebounded 0.2%), in line with market expectations.
  • The monthly increase in core CPI decreased slightly to 0.1% (previous value rebounded by 0.2%), which is in line with market expectations; unadjusted year-on-year continue to maintain the figure of 1.6% increase, in line with market expectations.
  • US crude oil inventories fell for five consecutive weeks for the week ending January 8, 2021. The weekly decline to 3.247 million barrels (previous figure dropped by 8.01 million barrels). It fell to approximately 482.21 million barrels, a decrease exceeded market expectations by 2.266 million barrels.

Headliner to Watch

  • Unemployment claims expected to remain elevated at the 785K mark. Labour demand is still lethargic but is set to recover supported by loose fiscal initiatives from the incoming administration.
  • Fed Chair Powell will speak online hosted by Princeton University and is expected to field audience questions on contemporary monetary policy.

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Antony Tan
Ben Li
Kevin Jock