Treasury Yields Retreat with Focus on Powell’s Testimony

Equities

Futures tied to major US stock indices inched higher yesterday as US Treasury yields eased from their interim highs. Tech stocks were among the top performers after suffering significantly in the past couple of weeks due to a surge in yields, which sparked rotation from growth stocks to value and cyclical stocks. Market participants are looking forward to Powell's testimony over the economic recovery. The latter mentioned yesterday in an event hosted by the Bank of International Settlement that US economic recovery is strong. However, there are no anticipations for any change in tone regarding monetary policy. During the Asian session, US futures surrendered partial gains as investors await how the bond market will react to Powell. The tech-heavy Nasdaq hovered near 13100, the Dow Jones Industrial Average eased to 32600, and SPX500 held steady near 3920.

USD

The dollar index which measures the greenback against a basket of major currencies hovered near 92 level, ahead of Powell's testimony. The buck was firmer against peers, supported by the fact that the Federal Reserve is not in a hurry to move against rising yields or inflation relative to other major central banks. The EURUSD was almost steady near $1.1930, the AUDUSD dipped to $0.7694, and the USDJPY was little changed near 108.70.

Metals

Precious metals prices continued to trade in a tight range awaiting fresh fundamental drivers. The price of a gold ounce was trading flat near $1740, the price of a silver ounce slipped to $25.70, and palladium fluctuated near $2600.

Oil

Oil prices were almost flat in anticipation of new drivers which could lead to the next directional move. Following last week's sharp sell-off, prices rebounded a little, recovering partial losses and steadied. Investors are weighing in the new lockdowns in Europe along with soft vaccine rollout, and on the other hand, the US progress on vaccination and economic recovery. The West Texas Intermediate Crude May contract eased to $60.65, and Brent Blend May contract slipped to $63.70.

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