Summary:

• Stock markets recover from early weakness 
• US500 turns positive on the day
• SEK falls lower as inflation declines
• Drop in GDT could weigh on NZD
• Cryptos rise further as Bitcoin tests trendline

Some early weakness in stocks has subsided as the day wore on with most major indices in positive territory by the European close. The US returned from a long weekend and despite the markets beginning lower on the Wall Street open, buyers stepped in and pushed the indices into the green. The US500 remains in a consolidation phase however, sat between its 8/21 EMAs and also the 50%/61.8% fibs of the recent decline.

The swift sell-off at the start of the moth has been widely attributed to a fear that a rise in inflation could lead to more upside in yields. We looked into the relationship between real yields and the S&P500 and contrary to popular opinion found that there wasn’t a notably strong inverse relationship.

In defiance of expectations Swedish inflation disappointed in January mainly on the back of a huge decrease in clothing and footwear prices. The data cuts back on odds to see the first hike later this year as the Riksbank has outlined recently. As a result, the SEK is tumbling over 1.1% against the greenback being, however, fuelled by relative US dollar strength seen today. Is today’s report going to influence the current Riksbank’s stance?  

 The most recent results from the GDT auction have shown a decline in the price index for milk, ending a run of 3 consecutive gains. The drop of 0.5% is fairly small in its nature but still represents a drop nonetheless and considering the recent strength in price gains it has come as a little bit of a disappointment. Today’s drop in the GDT could weigh a little on the NZD going forward and given its recent strength some sort of pullback is plausible.

Bitcoin has added to recent gains once more today with the market moving above 11,500. Price however is now coming close to a falling trendline from the all-time high and swing resistance around 11800 and these could provide a stern test to the recent rally. As far as the newest revelations are concerned one needs to mention the CFTC story. Namely, the US Commodity Futures Trading Commission has purportedly created a bounty to encourage whistle-blowers coming forward in exposing so-called ’pump and dump’ schemes.