There were a lot of important events that happened in the markets on Monday. The main one is the Senate's approval of $ 1.9 trillion stimulus measures for the US economy. The second, which we should also put attention to, is D. Tapper's statement published in the media. The billionaire investor believes that the rebound in the yield of US Treasury government bonds has been completed. There is a possibility that this statement from a successful person in the investment business may undeniably influence the demand for company shares in the US.
According to investors, these two events were primarily the reason why the demand for so-called growth stocks experienced strong pressure during the pandemic. But now, they believe that it will receive significant support in the wake of the expectation of the strongest economic growth. Given these sentiments, yesterday's focus was on the company shares included in the DOW 30 industrial index. On the other hand, shares of technology companies, which were temporarily in demand during the pandemic, were under pressure. This was clearly manifested in the dynamics of the S&P 500 broad market index and even more noticeably in the NASDAQ.
It is also worth noting that the yield of the benchmark 10-year Treasuries hovered around the 1.6% mark in the morning. During the Asian trading session, it made a downward correction, falling by 1.52% to 1.570%. Thus, time will tell how right Tapper was. However, there are some rumors in the market that the growth of government bond yields is not yet over, and may surge to a pandemic level of just above 1.9% for 10-year securities.
Recently, the growth of the US treasury yield is supporting the US dollar, which was sharply rising against the basket of major currencies and consolidating above the 92nd figure. Today, the indicator slightly fell by 0.02%, that is, to 92.317%.
At the moment, investors are concerned about the possible significant growth in stock markets. However, it is hard to say whether it will continue as confidently as it was yesterday. Most likely, this is just somewhat a one-time reaction to the above-mentioned reasons, which brought optimism in the markets. There is no doubt that the markets will search for reasons to buy stocks, with a belief that the global economic recovery cannot be stopped. Unfortunately, there are other real issues that include the consequences of the pandemic in developed economies, permanent lockdowns in Europe, weak labor markets and an unclear recovery in economic and business activity.
As for the likely dynamics of the dollar, it will fully depend on the movement of the yield of treasuries. If it resumes growth, the dollar will be in favor, but this national currency will experience full-fledged pressure across the entire market profile.
Forecast of the day:
The EUR/USD pair is recovering amid a slight downward correction in US Treasury yields. Selling the pair can be considered around the level of 1.1900, with a possible continuation of the price decline to 1.1800.
Gold is trading below the key level of 1700.00. We consider it possible to resume its sales on the growth, approximately from the level of 1700.00, with a likely decline to the level of 1669.00.
