Investment Update: Key Bond And FX Levels To Watch
US 10-year bonds and the Japanese yen make the spotlight this week
Published on 6 March 2017
From a strategic perspective, we continue to be bullish on the US stock market (e.g. ignore short-term dips) and concerned about emerging markets (e.g. fade rallies). This is a counter consensus view, where the market is positive on emerging markets.
This week, we believe USD/JPY could break into the 115-120 range. USD/SGD could trade in the 1.42-1.43 range. While UST 10YR bond yields could trade in the 2.5-2.55% range. We believe China’s NPC press releases and macro data releases will be uneventful and potentially have limited global market implications.
In India, it’s a close call on the Uttar Pradesh state elections – hence, we don’t have the fortitude to have a tactical view on markets.
In our view, the US stock market along with key technical levels of UST 10YR government bond yields and USD/JPY will be important to watch this week. Also, watch out for how metals prices (as proxied by the London Metals Exchange (LME) index) behave – since it has spillover effects to US inflation expectations and the Dow Jones Transportation (TRANS). Global stock markets (ex-USA) move in tandem with the TRANS, broadly speaking. The key technical levels to watch in global financial markets are: UST 10YR 2.50%, USD/JPY 115 and LME Index 2900.
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