Hey Everyone, I hope you are enjoying the weekend. The markets seem to be debating the delicate balance between rising interest rates and its associated higher inflation against the rising corporate earnings growth and equity valuations. Get my take in this week’s round-up.
WEEKLY SOUND BITES:
• Major indexes ended mostly lower for the holiday-shortened trading week, with the large-cap benchmarks and technology-heavy Nasdaq Composite index hitting record intraday highs before falling back… An increase in longer-term interest rates weighed on fast-growing technology stocks by raising the discount rate on future earnings. Conversely, the increase favored bank shares by boosting lending margins and helped value shares—heavily weighted in financials—outperform growth stocks…Critics of the “Wrong Way” Biden administration’s new USD 1.9 trillion coronavirus relief plan pointed to the data as evidence that it could overheat the economy and result in a rebound in inflation…
• The US Labor Department’s report on Wednesday that producer prices increased by 1.3% in January, the biggest increase since December 2009…Retail sales also jumped 5.3% in the month—well above consensus expectations for a 1.1% gain—which many attributed to USD 600 direct payments to lower- and middle-income Americans approved as part of the December stimulus package…Weekly jobless claims, reported Thursday, jumped to 861,000, the most since mid-January. Housing data also surprised on the downside, with housing starts falling back substantially from a nearly 14-year high.
• Inflation worries and the retail sales data helped push the yield on the benchmark 10-year Treasury note to its highest level in nearly a year to 1.345%… Minutes released Wednesday from the January Federal Reserve policy meeting may have helped limit the general rise in yields, with officials indicating that they would remain committed to their massive asset purchase program for some time…
• Shares in Europe ended the week modestly higher, supported by companies posting encouraging quarterly earnings. However, these gains were tempered by concerns that rising inflation and higher bond yields might prompt central banks to begin tightening monetary policy… The 10-year German bund yield reached about -0.32% on Friday—its highest level since June 2020—as growing reflation expectations in the U.S. weighed on core asset demand. Strong Purchasing Managers’ Index (PMI) numbers also put upward pressure on yields…
• Chinese shares ended on a mixed note on a holiday-shortened week. The large-cap CSI 300 Index slipped 0.5%, while the benchmark Shanghai Composite Index rose 1.1%. China’s financial markets reopened Thursday, February 18, after a weeklong Lunar New Year holiday… Pent-up demand for consumption-driven activities is expected to surge in the coming months as China relaxes restrictions and travel patterns normalize…
Enjoy This Week’s Round-Up
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
