Daily Market Commentary 3rd March 2021

US Bond yields continued to stabilize overnight, thus settling equity and currency markets. The US 10 Year has settled at just above 1.4% for the third straight day now, thus removing the source of market panic, from the previous weeks trading. US economic data continues to come in positive, with ISM Manufacturing numbers, coming in stronger than expected. There is no doubt there has been targeted bond purchasing going on in the markets. The US Dollar was softer, allowing the EUR to trade 1.2075, while the GBP pushed back above 1.3950.

The RBA left rates unchanged, at their latest Monetary Policy meeting, bending over backwards to reassure markets. The RBA Governor assured markets that the current monetary policy would remain, for at least three years and they stand ready to inject further liquidity, in the form of QE. They confirmed they had actively been buying bonds in the market, since late last week, to suppress the surge in global interest rates. The worries over inflation and house prices were firmly allayed, placing the focus on growth and wages. The AUD rebounded to trade 0.7820, while the NZD approaches 0.7300, despite suffering another strict lockdown.

The markets focus remains on interest rates, but Central Banks remain committed to extreme monetary expansionism, to ensure that the bond market does not destabilise the economic recovery.