Market Recap 8th – 12th March 2021

Hi traders and welcome to this weeks recap.

We hope that you had an amazing week and capitilized on some of the market moves.

We had a steady amount of high impact news this week as you can see below.


On Monday we heard Bank of England Governor Andrew Bailey speak. The key takeaway from the latest set of remarks by Bailey is that negative rates contingency planning implies nothing about their intentions in that direction.

This keeps with what we have heard since January for the most part – that being negative rates is just an insurance policy and no longer the base case scenario.


On Tuesday we heard Governor Philip Lowe from the Reserve Bank of Austalia speak at the Australian Financial Review Business Summit, in Sydney. The key notes from his speech (via Reuters) were:

  • Rates to stay at 0.1% until actual inflation in 2-3% band.
  • Noting market expectation of rate rises in 2022, 2023 says “this is not an expectation we share”.
  • Says unlikely to see wages growth consistent with inflation target before 2024.
  • Says want to achieve maximum possible sustainable level of employment.
  • Says possible can sustain an unemployment rate in the low 4s.
  • Not considering removing 3-yr yield target or changing from 10 bps.
  • Says still considering whether to move from April 2024 bond to Nov 2024.
  • Later in year, board will consider case for further extending bond purchase program.
  • Understandable global bond yields moved off historic lows given improving outlook.
  • Yields suggest investors more confidence that policy measures will work to lift inflation.
  • Says this is good news, though expected inflation still not above our target.
  • Says Australia within striking distance of recovering pre-pandemic level of output.
  • Says recovery in employment has been “v-shaped”.
  • Recovery still has long way to go, economy operating well short of full capacity.
  • Says business investment lagging, strong and sustained pick-up needed.


On Wednesday we had CPI news out from the USA and the Rate Statement from the Bank of Canada.

  • CPI +0.4% m/m vs +0.4% expected.
  • Prior m/m reading was +0.3%.
  • CPI ex-food and energy +0.1% m/m vs +0.2% expected.


Bank of Canada left overnight rate unchanged, as expected. Other key points were

  • Lower bound still at 0.25% and upper bound still at 0.50%.
  • Pace of QE remains at “at least” $4B per week.
  • Economic slack not absorbed “until into 2023”, same as prior.
  • Says “economy is proving to be more resilient than anticipated”.
  • GDP growth in the first quarter of 2021 is now expected to be positive, rather than the contraction forecast in January.
  • Housing market activity has been much stronger than expected.
  • Improved foreign and commodity demand has also brightened the picture.
  • Despite the stronger near-term outlook, there is still considerable economic slack and a great deal of uncertainty about the evolution of the virus and the path of economic growth.
  • Labor market is “a long way from recovery”.


Thursday saw the lastest Monetary Policy Statement from the European Central Bank who left rates unchanged.

The full statement can be viewed here.


It was good news from Canada on Friday with February employment at +259.2K vs +75.0K expected.

  • Prior was -212.8K.
  • Full time +88.2K vs +12.6K prior.
  • Part time +171.0K vs -225.4K prior.
  • Unemployment rate 8.2% vs 9.2% expected (9.4% prior).
  • Participation rate 64.7% vs 64.7% prior.
  • Hourly wage rate for permanent employees +4.3% vs 5.1% y/y expected.
  • Prior wage rate +5.9% y/y.
  • Long term unemployed -49K.
  • Retail jobs +122K
  • Accommodation and food services +65K.
  • Total hours worked +1.4%.
  • Total hours worked -3.2% y/y.
That is a stunningly strong number. In particular, the drop in unemployment with a flat participation rate. There was some reopening in February and Canada’s wage subsidy programs did a good job of keeping workers attached to jobs. Evidently businesses are feeling good enough to get employees right back on the job. On net, 266K jobs were lost in the prior two months and 259K were added back.
Market expectations of a Bank of Canada rate hike are moving up quickly and USD/CAD fell to 1.2511 on this.
As you can see, these were mostly low paying jobs. Statistics Canada said jobs were concentrated in those paying $17.50/hour or less and that shows up in the drop in wages.
Friday after noon sees CAD leading the pack and JPY weak and in last place which was the same as last week for JPY.

From all of us at Trade & Train, have a great weekend and stay safe.





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