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MARKET RECAP 29th March – 2nd April 2021

Howdy traders.

Happy Easter from all of us at Trade & Train!

It was a shorter trading week for us this week with the Easter weekend. The markets were still open but liquidity and general momentum was low on Friday even with Non-Farm Payrolls. Expect the same type of day on Monday 5th April 2021 with a lot of Bank Holidays (see the below).

So what were the key headlines this week? Let’s take a look.

Australian Coronavirus Wages Ended – 100K Jobs Expected To Be Lost

Estimates of the expected impact:
  • 100K at risk of losing their jobs
  • These losses won’t occur in one hit but will be spread over a number of months
  • With participation expected to track sideways, the unemployment rate will drift up to 6.0% in Q2 before the recovery in the second half of the year takes the unemployment rate back down to 5.7%.

Treasuries Selloff Looks Poised To Extend Further

10-year yields were up 5 bps to 1.75% and breaking that would likely see the selloff in Treasuries gather more pace as traders will start to potentially eye the 2% level next.
The market resumed the selloff in Treasuries and it really is just not looking back since the turn of the year.
There had been a slight pullback after hitting 1.75% earlier in the month but the move was limited around 1.60% and here we are again.
One might still argue that the market is getting ahead of itself but with the Fed allowing a steeper for longer narrative, the path of least resistance is quite clearly set out.
Keep an eye on this space as we start to challenge key levels now. That may yet feed through to more dollar strength and yen weakness this week.
Gold threatened a break of the March low after two days of heavy selling but bounced proving that it still has some life left.
It was at the highs of the day, up $17 to $1702 as the US dollar broadly weakened.
This down through $1659 is a critical support zone for gold and it needs to get above $1755 to turn the tide, even temporarily.
Seasonally, April is the sixth best month but the period through July is middling. In the big picture, a retracement all the way down to $1500 could be corrective and set up a much bigger rally later.

Oil climbed as OPEC+ members make statements ahead of closed meeting

The comments generally highlight discipline

  • Saudi oil min:OPEC should continue with flexible approach
  • Saudi oil min: “Until evidence of recovery is undeniable, we should maintain this cautious stance”
  • Novak: We have to monitor vaccine pace and lockdowns
  • Novak: Important not to let the oil market overhead or be undersupplied
  • Angloa minister highlighted need to caution
The closed meeting (where the decision-making happens) is now underway. It sounds like an extension of cuts is coming. WTI was up to $60.28 from $59.50 before they started speaking.

US March non-farm payrolls +916K vs +660K expected

  • Prior was 379K
  • Unemployment rate 6.0% vs 6.0% expected
  • Prior unemployment rate 6.2%
  • Participation rate 61.5% vs 61.5% expected (was 62.8% pre-pandemic)
  • Prior participation rate 61.4%
  • Underemployment rate 10.7% vs 11.1% prior
  • Average hourly earnings -0.1% m/m vs +0.1% expected
  • Average hourly earnings +4.2% y/y vs +4.5% expected
  • Average weekly hours 34.9 vs 34.7 expected
  • Two month net revision +156K
  • Change in private payrolls +780K vs +643K expected
  • Change in manufacturing payrolls +53K vs +35K expected
  • Long-term unemployed at 4.2m vs 4.1m prior
  • The employment-population ratio, at 57.8% vs 57.6% prior
  • Full report
This report landed on Good Friday into a thin market and we saw some quick pops in the US dollar but not as large as you would expect. The unemployment rate was in line with estimates but given the uptick in the participation rate, that’s good news.
Have a lovely Easter everybody.
All the best.
T & T

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