Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Yields Rise, Dollar Dips, PMIs Diverge, Oil Slips - What's up in Markets

EconomyFeb 19, 2021 06:51
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters

By Geoffrey Smith -- Treasury yields rise and the dollar falls to new lows against everything from crypto to sterling as markets return to the reflation trade. Stocks are set to open up, with Deere (NYSE:DE) and Roku (NASDAQ:ROKU) conspicuous gainers. Oil is slipping as Texas oil output comes back online and refiners struggle to get back up to speed. And Joe Biden wants talks with Iran. Here’s what you need to know in financial markets on Friday, February 19th.

1. Reflation trades hit Treasuries

Yields on U.S. Treasury bonds rose back to their highest in a year as investors bet again on loose fiscal and monetary policy reflating the U.S. economy in the course of this year.

By 6:30 AM (1130 GMT), the yield on the United States 10-Year note was 1.31%, a full 118 basis points over that on the two-year. The spread between the two, hasn’t been as wide since 2017. Steep yield curves are typically associated with periods of robust growth, and the current configuration chimes with predictions of U.S. GDP topping 5% this year.

The likelihood of policy remaining loose throughout the year was given a boost by jobless claims data that showed the extent of slack in the labor market. Initial claims rose to 861,000 last week.

The U.S. data calendar is light on Friday, with only existing home sales and a speech by Boston Fed President Eric Rosengren of note.

2. Pound, Aussie hit new highs despite weak retail sales

The same factors pushing yields higher have also pushed the dollar lower in the foreign exchange markets: the Australian dollar hit its highest in over a year against the greenback, while sterling topped $1.40 for the first time in over three years.

Both currencies had to shrug off weaker-than-expected retail sales reports in Australia and the U.K., respectively.

However, cryptocurrencies appeared to remain the preferred choice of those betting on dollar devaluation: Bitcoin crested $53,000 for the first time, while Ethereum remains only a whisker off the all-time high of $1,944 that it posted late on Thursday.

3. Stocks set to end week on healthy note; Roku, Deere eyed 

U.S. stocks are set to open higher after taking a hit from the jobless claims data on Thursday, which acted as a reminder of the divergence between the state of the stock market and the current state of the economy.

By 6:30 AM ET, Dow Jones futures were up 33 points, or 0.1%, while S&P 500 futures were up 0.2% and NASDAQ Futures were up 0.3%. Russell 2000 futures were doing even better, with a gain of 0.8%.

Stocks likely to be in focus later include Roku, which swung to a profit of $67 million in the fourth quarter on the back of a 58% surge in revenue. Chief executive Anthony Wood said the pandemic has “permanently changed the curve” for streaming adoption, Roku’s biggest revenue driver.

Also of interest will be earnings from Canadian automotive supplier Magna (NYSE:MGA), increasingly talked about as potential partner for Apple (NASDAQ:AAPL) in electric vehicles. Agricultural equipment maker Deere & Co has already reported its profit more than doubled in the fourth quarter, pushing its stock up 3.4% in premarket.

4. PMI surprise in two directions

Divergence was the name of the game in Europe’s economies again in January. Flash purchasing managers indices for the Eurozone showed manufacturing activity expanding at its fastest rate since early 2018, the index rising to 57.7 from 54.8. Analysts had expected a drop to 54.3.

However, services were a mirror image, as lockdowns ravaged the retail and hospitality sectors again. The Eurozone Services PMI fell to 44.7 from 45.4, disappointing hopes for a modest recovery.

Things looked better in the U.K., where both manufacturing and services both handily outstripped expectations. Markit’s U.S. PMI for January will be released at 8:45 AM ET, but tends to be overshadowed by the Institute for Supply Management’s report, which is due next week.

5. Oil slips as cold eases

Crude oil prices eased off again, as production in Texas started to resume in the aftermath of the lethal cold snap earlier in the week. The U.S. administration has also extended an offer of talks to Iran on returning to the UN-sponsored agreement on non-proliferation that Donald Trump walked away from in 2017.

U.S. crude futures were down 2.6% at $58.93 a barrel, while Brent crude was down 2.1% at $62.61 a barrel.

Texan refineries that typically handle millions of barrels of oil a day will take longer to return to normal service than the wells that extract the crude, a factor that is likely to support premiums for reined products in the near term.

In addition to Baker Hughes rig count later, the Commodity Futures Trading Commission will also release its weekly data on speculative positioning. 

Yields Rise, Dollar Dips, PMIs Diverge, Oil Slips - What's up in Markets

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email