Weekly Market Update 26 Feb 2021 – Bond Market Selloff Triggers Spike in Yields
Weekly Market Update 26 Feb 2021 – Bond Market Selloff Triggers Spike in Yields
1. Federal Reserve Chairman Jerome Powell emphasized on Tuesday that there will be no interest rate hikes nor tapering anytime soon. Despite that, a sudden vacuum in risk appetite in the fixed income space sparked a chain of events where a sudden bond market sell off resulted in a spike in yields along with the rise in the dollar.
2. On the other side of the Atlantic, UK’s labour data was mixed. Unemployment rate rose to the highest in 5 years while average hourly earnings growth was strong, this suggests a likely extension of the furlough scheme.
3. Ten year German bund yields climbed to the highest level in 11 months, and European Central Bank officials signalled that they were closely monitoring the evolution of the yields and were more ready to act than the Fed. This suggests a bearish signal on EURUSD but given that it remains unchanged it might turn soft in the coming weeks.
