March 11, 2021

Weekly Jobless Claims, ECB Meeting In Focus; Oil Prices Move Higher

Weekly Jobless Claims, ECB Meeting In Focus; Oil Prices Move Higher

Stock futures are trading sharply higher, and market players are ready to drive stocks even higher as optimism continues to grow among them. The House passed the third stimulus package of $1.9 trillion yesterday, and this means that the US economy is likely to see more stable economic growth.

There is no doubt that the US economy needed this stimulus package because there are still over 10 million people who have lost their jobs because of the Covid-19. It is going to take a long time for the US economy to get back on track and return to its previous level. Investors believe that this particular package is going to provide the necessary fuel that the economy needs to recover. 

Another important event that traders kept a very close eye on yesterday was the Treasury auction. The 10-year T-Bill auction took place without any volatility, and this was immensely important. This is because if we had seen bond yields soaring again, they would have resurfaced the same concerns among investors that took the stock market down last week. 

Today we have the 30-year T-bill auction, and investors are hoping to see another peaceful day with respect to this auction. If this auction also becomes a success, then it is safe to say that traders have finally received Jerome Powell’s message about inflation and the Fed’s monetary policy. Basically, no drama will be a good thing for the stock market.  

Something else which is also helping the stock futures today is that the inflation data didn’t spike much yesterday. We saw a very modest move in the US inflation number, and that was the final nail in the coffin of those concerns that drove the stock market into crazy territory during the past few weeks. 

As for the tech stocks, we did see some decent rebound in some big names, but the Nasdaq index started to lose steam as the sector rotation continued yesterday. Investors are still less thrilled about tech stocks. But the reality is that most of the Nasdaq 100 stocks are down easily 10% to 20% from their recent peak and this opens a decent opportunity to bag some bargains. 

Weekly Jobless Claims 

All eyes will be on the Weekly Jobless Claims number today, which is due later today. The forecast for the Weekly Jobless Claims number is 730K, while the previous data came in at 745K. 

ECB Day 

Today’s most important event is the European Central Bank’s meeting and its decision on monetary policy. No drama is expected as the ECB isn’t anticipated to change its monetary policy’s sailing path. It is highly likely that we may hear the echo of the same message that we had in the RBA and BOC‘s monetary policy meetings, and that is: the ECB is likely to play down any qualms around inflation. The message is likely to say that any surge in inflation is most likely to be temporary, and market players should not expect any change in the monetary policy. 

Commodities 

Oil prices have started to move higher after a brief sell-off, mainly because prices went too far and too fast. Yesterday, we had the Crude Oil inventory data, which was much stronger than the forecast, actual 13.8M while the forecast was 3.0M. Despite this, we saw a decent upward move in the oil prices, and traders are pushing the prices higher today. 

The fact is that when it comes to oil prices, investors are more optimistic that economic growth is on the right track, rather than anything else. A small increase in the inventory number isn’t much concern now. Oil traders know that oil demand is only becoming stronger every day, and this is pushing the prices higher 

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