Opening Bell: U.S. CPI On Tap After China Trade Beat; Bitcoin Scores New Record


  • China imports surged 38.1%, beats expectations
  • US CPI expected to gain 0.5%
  • Bitcoin hits new record high

Key Events

US yields rose with futures on the , , and as well as European stocks on Tuesday following yesterday’s inflation concerns which led stocks to sell off.

The dollar was higher but the gold slump continued. Bitcoin reached a new record.

Global Financial Affairs

European shares rebounded from Monday’s selloff thanks to promising economic data from China which gave investors a shot in the arm and boosted confidence in the economic recovery. Traders are keenly awaiting US inflation data which will be released at 8.30am EST.

The Index edged back toward Friday’s record. The export-heavy German outperformed after China’s imports data showed reached their highest level in four years. However, the UK’s was in the red as the country’s figures were lower than expected, weighing on the index.

The British economy grew by 0.4% in February compared to the 0.6% expected. Another reason for the disparity may be the values of their respective currencies, as the strengthened versus the euro, making its products less competitive on the global stage.

EUR/GBP Hourly

EUR/GBP Hourly

The EUR/GBP is developing an hourly H&S top. Notice how the previous resistance precisely became the current support.

The US yield re-approached the 1.7% mark, leading European yields. Global stocks have sold off since March, when investors decided that rising Treasury yields were no longer an indication of an economic recovery but a predictor of rising inflation. Concerns emerged that the Fed would raise rates, despite its insistence to the opposite, which would—it was feared—undo any of the good from the unprecedented quantitative easing and fiscal supports.

Attention will be on today’s US release which is forecast to have gained 0.5% in March, up from February’s 0.4% climb. This data became paramount after the Fed suggested it would give the economy a long leash, to allow it to rebound from its pandemic related ravage. If the CPI rises more than expected we might see a range-breakout for Treasuries.

10-year Treasuries Daily

10-year Treasuries Daily

Rates have been under pressure, having fallen below their uptrend line and forming a potential top, with a bearish MACD and negative RSI divergence.

However, an unexpected inflation spike would return Treasuries into a selloff, pushing yields to blowout the bearish pattern, catapulting them all the higher. This will also restart to the reflation trade, which has been fizzling.

A rise in yields would also boost the , which has been languishing since last week.

Dollar Index Daily

Notice that despite the range, the dollar found support by a previous resistance, though it did fall out of its rising channel. While that may be a bearish signal, it could simply mean that the channel was too steep. Overall, we expect the dollar to rise after completing a huge falling wedge since the March peak, that could return the greenback there.

fell for the third day while yields were rising.

Gold Daily

Gold Daily

From a technical standpoint, gold found resistance by the top of a bearish flag.

In contrast to gold, surged to over $62,800, hitting a new record high of $62,844.

Bitcoin Daily

Bitcoin Daily

Keep an eye though on the potential wedge formation, though the one in the RSI is being blown out, as of now, a bullish sign.

was trading smack on the neckline of a H&S top whose right shoulder is a bearish rising flag.

Oil Daily

An uneven global recovery, mired by exponentially rising COVID cases in different parts of the world that are unable to vaccinate fast enough, is weighing on the outlook for demand.

Up Ahead

  • Banks and financial firms begin reporting first-quarter earnings this week: JPMorgan Chase (NYSE:) and Goldman Sachs Group (NYSE:) report on Wednesday, Citigroup (NYSE:) and Bank of America Corp (NYSE:) on Thursday and Morgan Stanley (NYSE:) on Friday.
  • The Economic Club of Washington hosts Fed Chair Jerome Powell for a moderated Q&A on Wednesday.

  • On Wednesday, the US Federal Reserve releases its .

  • US data including , and are published on Thursday.

  • On Friday, China releases figures for , and figures.

Market Moves

Stocks

  • Futures on the S&P 500 Index were little changed.

  • The STOXX 600 Index gained 0.1%.

  • The Index increased 0.1%.

  • The Index fell 0.2%.

Currencies

  • The Dollar Index was little changed.

  • The declined 0.1% to $1.1905.

  • The jumped 0.1% to $1.376.

  • The was little changed at 6.549 per dollar.

  • The strengthened 0.1% to 109.32 per dollar.

Bonds

  • The yield on 10-year Treasuries jumped two basis points to 1.69%.

  • The yield on r Treasuries increased less than one basis point to 0.17%.

  • Germany’s yield gained one basis point to -0.29%.

  • Japan’s yield decreased less than one basis point to 0.107%.

  • Britain’s yield rose one basis point to 0.802%.

Commodities

  • West Texas Intermediate crude increased 0.5% to $60 a barrel.

  • gained 0.6% to $63.64 a barrel.

  • Gold weakened 0.3% to $1,727.93 an ounce.



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