STATE OF THE MARKETS

Stocks mixed as yields rose. US stocks closed mixed on Tuesday, with the Dow (+0.59%) shot to new high while Nasdaq (-1.33%) and S&P (-0.06%) wobbled lower as investors started to look at bonds for safety. 1.69% for the 10Y and 2.10% for the 30Y attracted risk averse investors as Dollar (DXY) continued to flirt with the 96.20 barrier.

In the commodities market, crude pierced $77.50/bl mark after OPEC+ members agreed to contain production if demand flattered shall new lockdowns emerged. Gold rebounded to $1,815/oz ahead of FOMC minutes on Wednesday that would shed more light on the Fed’s tapering and rate hike plan. Elsewhere, iron ore stalled at $120.40/tn as investors awaits new catalyst from the US infrastructure program.

In the FX space, risk sentiments may be about to peak as Yen was sent to offers across all horizons. Aussie and Loonie flipped to demand in the short term accounts while Kiwi and Dollar flipped to offers. Long term sentiments remained unchanged. On Wednesday, markets look forward to seeing the latest earnings report from RPM International (RPM) and Simply Good Foods (SMPL) as well as the very much awaited FOMC minutes. EIA crude oil inventories will be in the spotlight for energy traders.

OUR PICK – No New Picks

No new picks until after NFP. An interesting day today that gold rebounded despite the fact that yields rose across various bonds’ maturities. Often thought as the enemy of the non-interest bearing gold, falling bond prices (hence rising yields) didn’t deter bidders/LME to fixed gold higher. We believe that markets finally see that inflation is going to stay around for a while and even non-interest bearing assets (like metals, energies, softs, meats, etc) have to be re-priced. We see defensive and value stocks to outperform in 2022.

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