US Session (11/02/2021)

The stock market's unrelenting climb propelled major US indexes to new all-time highs just a day before the Federal Reserve's policy announcement.

Profit margins have held up exceptionally well, despite rising commodity prices and supply-chain snarls, underpinning that strength. Many businesses have been able to pass on higher prices to customers, with the majority of them outperforming earnings expectations. Regardless of what the Fed says or does on Wednesday, there is a belief that the US will continue to have low-interest rates, which is good for equities.

Treasury two-year yields joined a global drop in short-term rates triggered by the Australian central bank's dovish speech released just a day before the Fed decision. With the Federal Reserve likely to begin winding down its asset-purchase program soon, analysts polled by Bloomberg are split on whether a rate hike would occur next year or in early 2023.

Technical indicators are indicating further volatility following the recent equities rise. The S&P 500 is not only testing the limits of its trading envelope, which is based on moving price averages, but the expansion of its upper and lower bands can also signal larger swings. Furthermore, the gauge's 14-day relative strength index is around 70, which some traders believe to be an overbought barrier.

Australia's central bank explores digital currency - Ledger Insights -  enterprise blockchain

Asia Session (11/02/2021)

Asian stocks were steady on Wednesday as traders considered another all-time high for US shares and a pullback in short-term sovereign yields ahead of the Fed's policy announcement.

Iron-ore price stability boosted commodity exporters in Australia, but shares in China and Hong Kong fluctuated. Japan is closed for the holidays. Futures for the S&P 500 and the Nasdaq 100 were little changed following new highs for US stocks. Wall Street has been bolstered by firm earnings' resilience to increased input costs in the face of pandemic-related supply chain and labor disruptions.

The dollar index held a climb. Because of the Japan holiday, Cash Treasuries will not trade in Asia. US treasury two-year yields fell overnight, joining a global drop in short-term rates triggered by the Australian central bank's dovish stance. Australian sovereign yields have fallen.

Premier Li Keqiang of China stated that the Chinese economy is under new downward pressure. Investors are keeping an eye on a coronavirus outbreak in the world's second-largest economy, which has already resulted in mobility restrictions. Debt problems in the country's real estate sector rage on as well.


Europe Session (11/02/2021)

Index futures in the US were neutral as an earnings-driven surge came to a halt amid a widening supply constraint and coronavirus restrictions in China. Shorter-term Treasury yields slipped as traders reduced their bets on rate hikes throughout the world.

The DJ industrial average's December futures fell after the underlying gauge surpassed its 36,000 level on Monday. Russell 2000 contracts increased. Bonds from Europe to the United States rose as Australia showed forbearance with rate hikes. China's steel output fell, causing iron-ore futures to fall. In New York, Tesla led the premarket losses.

Bond and currency markets prepare for the Fed to announce a reduction of asset purchases as a first step toward raising interest rates to control inflation. On the other side, equities markets are concentrating on earnings growth and valuations. Meanwhile, as Covid makes a resurgence in certain areas of the world, a mix of data on global economic recovery is further clouding the picture.

China's Premier Li: Seeing new downward risks for China's economy - State Media

German parties in discussions for a coalition are talking about deferring repayment of the Covid-19 debt to give themselves more fiscal agility.

ECB's Chief Supv. Enria: Banks predict gross NPL's to continue to decline at least through to the end of 2022.


Tuesday FX Option Expiries

USD/JPY: 114.25 ($602M), 84.20 ($500M), 113.50 ($430M)
EUR/USD: 1.1585 (EU1.82B), 1.1645 (EU796.1M), 1.1675 (EU733.2M)
USD/CAD: 1.2560 ($690M)
USD/CNY: 6.3700 ($900M), 6.5250 ($300M)
AUD/USD: 0.7100 (AUD446.5M)
EUR/GBP: 0.8440 (EU580M), 0.8525 (EU440M)
GBP/USD: 1.3800 (GBP576.8M), 1.3650 (GBP315.8M)