Markets Rebound As US Treasury Yields Recover – By LCG Research Team

 

Asian markets moved northwards, following a mixed close on Wall Street and a recovery in US treasury yields. 10-year yields edged higher after a 2-day selloff, which sent the yields to their lowest level since 2017 and below the 3 month yield. The so-called warning shot for a recession has been fired. However, the 10 year yield, which was being closely watched amid a lack of US data has since edged higher providing a level of calm to investors.

Given the potential for positive conclusions to near term risk events, such as Brexit and the US – Sino trade dispute, the recent selloff and recession fears appear a little over done. A successful negotiation of both Brexit and the US – Sino trade agreement could mean there is still more upside for riskier assets, throwing recession calls into doubt.

On Wall Street, home builders pushed higher on the prospect of cheap borrowing for longer. Tech shares moved lower after investors were left deflated by Apple’s new offering. Apple’s focus was on subscription services as a way of bringing in recurring revenue. However, a lack of detail has meant that investors are still looking for answers before they can buy into the newest vision. Apple stock closed 1.2% lower; a reflection of the disappointment.

US Consumer confidence and housing data

Investors will look towards a slew of US data due for release today. The most closely watched will be consumer confidence figures. The expectations is that consumer confidence ticked higher in March, this could support sentiment, as investors will be looking closely for any clues as to the health of the US economy. Housing data will also be under the spot light. New starts and building permits are both forecast to have fallen.

Oil gains amid increased Venezuelan tensions

Oil moved higher overnight clawing back losses from the end of last week. Recession fears pulled oil lower hitting the demand side of the equation. However, supply is still tight, amid continued OPEC cuts and sanctions on Iran and Venezuela. Increased tensions in Venezuela are offering further support to oil on Tuesday. Traders will now turn their attention to API inventory data for further insight into crude stock pile levels. Particularly after data last week showed that stock piles fell for a second consecutive week. Another fall in stock piles could see crude push above $60.00

Brexit update

The pound held steady overnight after Theresa May lost control of Brexit. Parliament voted 329 to 302 in favouring selecting their preferred Brexit option through a series of indicative votes. Ministers will now vote on a series of Brexit options for Brexit on Wednesday. Whilst the assumption is that this will lead to a softer Brexit or Brexit just being cancelled, the pound certainly hasn’t moved higher reflecting this. Ministers have resigned and threats of another general election are surfacing. The political instability is keeping a firm lid on any potential rally.

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Jasper delivers regular commentary, seminars and webinars on market news, trading analysis, strategy and psychology. He is regularly interviewed by BBC News, Bloomberg, CNBC and Sky News, and has featured in The Times, Guardian and Daily Telegraph. Jasper hosts a weekly charting analysis webinar. He is qualified as a Chartered Market Technician (CMT) with the Market Technician Association, and has a degree in Finance and Economics.