A suspiciously synchronised Fed

Stephen Innes SPI Asset Management

After peaking at 4.89% last week, the 10-year US Treasury yield retraced to an intraday low of 4.62% yesterday, pushing against the one-way ticket to 5 % that many had stamped.

The initial trigger for this reversal was the escalation of geopolitical tensions in the Middle East involving Hamas and Israel, which increased demand for safe-haven assets.

However, investor risk sentiment improved as confidence grew that the conflict would likely remain contained and not disrupt financial markets significantly.

Notably, the recovery in risk sentiment hasn't translated into higher US yields, indicating a degree of acceptance of the Federal Reserve's less hawkish turn.

While the market awaits the release of US PPI data and the Fed's meeting minutes today, recent dovish comments from Fed officials have been suspiciously synchronized; hence, US bond yields have continued to slide, suggesting recent Fed rhetoric is sinking in and will take precedence, over the meeting minutes.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.