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Market Talk – February 14, 2021

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The Bank of Japan made an offer for unlimited government bond purchases Monday, moving to curb a surge in long-term interest rates in the world’s third-largest economy. Japan’s central bank set the interest rate for purchasing 10-year government bonds at 0.25%. The market rate had risen close to that level recently on speculation the BOJ might begin reeling back its ultra-loose monetary policy in line with other central banks like the U.S. Federal Reserve. The BOJ offer drew no bids but still had the effect of lowering interest rates. The last time the Bank of Japan made a similar move was in July 2018. Japan has maintained a near-zero interest rate policy rate for years to counter a trend toward deflation, or falling prices. Business activity has slowed as the country’s population ages and grows smaller.

The major Asian stock markets had a mixed day today:• NIKKEI 225 decreased 616.49 points or -2.23% to 27,079.59• Shanghai decreased 34.07 points or -0.98% to 3,428.88• Hang Seng decreased 350.09 points or -1.41% to 24.556.57• ASX 200 increased 26.60 points or 0.37% to 7,243.90• Kospi decreased 43.23 points or -1.57% to 2,704.48• SENSEX decreased 1,747.08 points or -3.00% to 56,405.84• Nifty50 decreased 531.95 points or -3.06% to 16,842.80The major Asian currency markets had a mixed day today:• AUDUSD decreased 0.00007 or -0.01% to 0.71304• NZDUSD decreased 0.00284 or -0.43% to 0.66138• USDJPY increased 0.496 or 0.43% to 115.713• USDCNY  decreased 0.01018 or -0.16% to 6.35629Precious Metals:• Gold increased 3.25 USD/t oz. or 0.17% to 1,863.21• Silver increased 0.243 USD/t. oz or 1.03% to 23.809Some economic news from last night:New Zealand:FPI (MoM) (Jan) increased from 0.6% to 2.7%Some economic news from todayIndia:WPI Food (YoY) (Jan) increased from 9.56% to 10.33%WPI Fuel (YoY) (Jan) decreased from 32.30% to 32.27%WPI Inflation (YoY) (Jan) decreased from 13.56% to 12.96%WPI Manufacturing Inflation (YoY) (Jan) decreased from 10.62% to 9.42%CPI (YoY) (Jan) increased from 5.66% to 6.01%EUROPE/EMEA:

The Bank of England will raise interest rates faster than previously thought to tame surging inflation, economists polled by Reuters suggested. A near 30-year high inflation rate in December pressured the Bank of England to raise rates for a second meeting in a row earlier this month, taking its Bank Rate to 0.5%. Nearly two-thirds of respondents in the February 7-11 poll, or 25 of 40, expected a 25 basis points increase in Bank Rate to 0.75% at the conclusion of the next MPC meeting on March 17. That would mark the first time the bank has raised rates at three meetings in a row since 1997.
The major Europe stock markets had a negative day:• CAC 40 decreased 159.40 points or -2.27% to 6,852.20• FTSE 100 decreased 129.43 points or -1.69% to 7,531.59• DAX 30 decreased 311.15 points or -2.02% to 15,113.97The major Europe currency markets had a mixed day today:• EURUSD decreased 0.00325 or -0.29% to 1.13072• GBPUSD decreased 0.00206 or -0.15% to 1.35260• USDCHF increased 0.00145 or 0.16% to 0.92602Some economic news from Europe today:Swiss:PPI (YoY) (Jan) increased from 5.1% to 5.4%PPI (MoM) (Jan) increased from -0.1% to 0.6%US/AMERICAS:

St. Louis Fed President James Bullard wants to raise rates as soon as possible, stating that the central bank’s entire credibility is on the line. “I do think we need to front-load more of our planned removal of accommodation than we would have previously. We’ve been surprised to the upside on inflation. This is a lot of inflation,” Bullard told CNBC. Bullard said that it would be important for the Fed to gradually raise rates in an “organized” way to not disturb the markets. “My interpretation was not so much that report alone, but the last four reports taken in tandem have indicated that inflation is broadening and possibly accelerating in the U.S. economy,” Bullard said.

US Market Closings:

  • Dow declined 171.89 points or -0.49% to 34,566.17
  • S&P 500 declined 16.97 points or -0.38% to 4,401.67
  • Nasdaq declined -0.23% or 0% to 13,790.92
  • Russell 2000 declined 9.36 points or -0.46% to 2,020.79


Canada Market Closings:

  • TSX Composite declined 196.33 points or -0.91% to 21,352.51
  • TSX 60 declined 12.78 points or -0.98% to 1,294.99


Brazil Market Closing:

  • Bovespa advanced 326.84 points or 0.29% to 113,899.19

ENERGY:The oil markets had a mixed day today:•Crude Oil increased 0.51 USD/BBL or 0.55% to 93.6100•Brent increased 0.29 USD/BBL or 0.31% to 94.7300•Natural gas increased 0.201 USD/MMBtu or 5.10% to 4.1420•Gasoline decreased 0.0091 USD/GAL or -0.33% to 2.7293•Heating oil decreased 0.0081 USD/GAL or -0.28% to 2.9028The above data was collected around 12:38 EST on Monday• Top commodity gainers: Natural Gas (5.10%) and Lumber (2.47%), Aluminum (3.68%), Lithium (2.61%)• Top commodity losers: Cocoa (-2.78%), Orange Juice(-2.16%), Methanol(-2.15%) and Steel(-3.98%)The above data was collected around 12:51 EST on Monday.BONDSJapan 0.225%(+0.1bp), US 2’s 1.6030% (+0.12%), US 10’s 2.0171% (+9.9bps); US 30’s 2.3189% (+0.08%), Bunds 0.278% (-1.4bp), France 0.759% (-1.3bp), Italy 1.97% (+0.8bp), Turkey 20.85% (+2bp), Greece 2.661% (+4.1bp), Portugal 1.19% (+1.8bp); Spain 1.304% (+7.3bp) and UK Gilts 1.5840% (+3.8bp).