Rates as of 0500 GMT
Normally I start my day by looking at the stock markets to see whether were in a riskon or riskoff mode. However, we cant rely on that barometer so well nowadays to give the FX market direction, because what were seeing in the stock markets nowadays is rotation.
Since the news of a successful vaccine broke back in November, pretty much everything has gone up. Now however with the rise in bond yields investors are being more discerning. Some of the favorites in particular, the tech stocks are declining while stocks that usually benefit in a recovery, such as consumer discretionary and banks, are rising.
We can see that if we compare the SP 500 equalweight index which eliminates the excessive impact of the megacap tech stocks, such as Amazon, Apple and Tesla and the NYSE FANG index, which covers those 10 stocks exclusively Facebook, Apple, Google, Tesla and several others.
So, for example while the SP 500 was down 0.54 yesterday, the equalweight SP 500 was up 0.66 and 68 as the stocks in the index rose, led by consumer durables and banks 1.79. Meanwhile, the NASDAQ index is down 10.5 from its midFebruary peak, while Tesla fell another 6 yesterday to stand 36 below its late January highs.
On the other hand, Gamestop jumped 41 yesterday, so theres apparently still hope for the darlings of the retail investors.
The Treasury market was less volatile yesterday, but 10year yields still moved about 2.5 bps higher on expectations that…