Awaiting more data

It hasn’t been the most thrilling start to the week but that didn’t stop investors from piling back into stocks on Monday in the hope that January data proves to be an anomaly.

That enthusiasm didn’t flow through to Asia overnight where indices are a mix of tiny losses and gains, and Europe looks poised to open in a similar fashion. In reality, the bumper start yesterday was simply a process of unwinding the losses from late last week which further suggests investors are in no mood to be discouraged.

While bond markets have pivoted quite considerably from pricing in peak interest rates in the near future and rate cuts later in the year to multiple more hikes, perhaps even a reversion to 50 basis points, and no cuts this year, the message doesn’t appear to have gotten through to equity markets.

That may well change if the February data continues to point to red-hot labour markets, stubborn inflation, and healthy household spending. But I expect that won’t be the case and investors may well be banking on that too. We all want to see resilience in the economy but if that leads to much higher interest rates, which are already now very high, that resilience won’t last long and hopes of a soft landing will quickly fade.

Profit-taking kicking in?

Bitcoin is trading a little lower today after giving up the bulk of its Monday gains late in the session. We’re still seeing strong resilience in cryptos but perhaps there’s some profit-taking kicking in after what has been a remarkable start to the year. There remains considerable resistance around $24,500-$25,500, a break of which could be a very bullish signal.

For a look at all of today’s economic events, check out our economic calendar:

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.