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Jittery markets…

For now, the stock market and the currency market are both taking the cue from the US bond market. Higher bond yields -> weak risk sentiment and stronger USD.

Just when it looked safe to get back in the waters, the US 10-year bond yield surged higher above 1.70% and re-ignited fears that the recent weakness in growth stocks is not yet over.

With market sentiment still fragile, Federal Reserve Chair Powell’s testimony before the Congress on Covid Aid and the Economy will be eagerly awaited by the investors, hopeful for words that will soothe the bruised bond market.

For now, the stock market and the currency market are both taking the cue from the US bond market. Higher bond yields -> weak risk sentiment and stronger USD.

This dynamic will likely prevail in the shorter term until the bond market stabilises and the tidal wave of stimulus money finds its way into various asset markets.


Bitcoin Note

The number of bitcoins on exchanges continues to drop to multi-year lows now, which is not something you historically see at major tops. The liquid supply of bitcoin keeps diminishing, in other words, retail investors and institutions continue to accumulate and pull bitcoins away from the exchanges. The yellow line on this chart shows the number of bitcoins on exchanges falling from around 3 million in early 2020 down to nearly 2.4 million today.

The third round of stimulus checks followed by the possibility of 3+% headline CPI prints coming out this spring are certainly catalysts for reinforcing belief in the narrative that bitcoin is a good inflation hedge and accelerating its adoption cycle.


US Rates will be driving risk appetite and its reaction to stimulus, economic data and central bank speak should be closely monitored.


1. Currencies : Keep short USD and long NZD, & CNH. USDCNH looks likely to trade in the 6.45–6.55 range for now.

2. Commodities : Silver — Support for Silver is at 24.70–80. Stay patient.

Key risks: Spikes in US bond yields may lead to a stronger USD and weaken risk sentiment. .

3. Equities :

Equity Index: : Long Nasdaq futures. The weakness in growth stocks on the back of higher US bond yields continues but eventually the Federal Reserve’s uber dovish stance and Biden’s stimulus cheques will improve risk sentiment. Stay patient.

Single Stocks: Dips in the stock market will result in good businesses at bargain prices. Don’t miss out on the asymmetric opportunities we highlighted in our TrackRecord Model Portfolio.

Key risks : Higher US yields and inflation fears are the key risks.


As of New York Close 18 Mar 2021,


  • Positive news that were lost in the shuffle of yesterday’s weakness included the Philadelphia Fed Index soaring to 51.8 in March (expected 23.5) from 23.1 in February and the European Medicines Agency (EMA) confirming that AstraZeneca’s (AZN 49.33, -0.74, -1.5%) COVID-19 vaccine is safe and effective. The EMA saw no association with an increase in overall risk of blood clots. GBP slipped against the dollar on Thursday as the Bank of England warned the outlook for Britain’s recovery remained unclear, dampening some speculation the bank would signal a more confident outlook. The BoE kept unchanged its interest rates (0.1%, unanimous) and its 895 billion-pound bond-buying programme, as expected.
  • Despite the recent optimism that the economic recovery is turning stronger, US Initial Jobless Claims showed that 770k filed for unemployment benefits last week (expected 700k) and that the job market still has a long way to go before full employment (a requirement to be met before the Federal Reserve will contemplate raising rates) can be achieved.
  • US 10-yr Bond yield rose past yesterday’s pre-FOMC high and flirted with 1.76% today on continued growth/inflation expectations and a report out of the Nikkei that the Bank of Japan is likely to widen its trading band around 0.00% for the 10-yr JGB to plus/minus 25 basis points from plus/minus 20 basis points. The 10-yr settled 8 basis points higher at 1.71%.
  • Note, crude futures slid -7.51% into the closing hours after France’s Prime Minister Castex announced a new month long lockdown in 16 regions, including Paris, stirring some concerns about the recovery in global oil demand. A stronger U.S. dollar (91.85, +0.40, +0.4%) was another negative factor for oil prices. Prior to today, crude futures were up 34% this year.
  • S&P 500 fell -1.5% on Thursday, as another spike in the 10-yr yield (1.71%) continued to undercut the heavily-weighted growth stocks, whose losses took a toll on risk sentiment. The Nasdaq Composite (-3.0%) and Russell 2000 (-2.9%) dropped around -3.0%. The Dow Jones Industrial Average decreased just -0.5% after setting an all-time high during the day.


U.S., China spar with rare harsh public rebukes in first in-person talks of Biden presidency

Notable Snippet: The United States and China leveled sharp rebukes of each others’ policies in the first high-level, in-person talks of the Biden administration on Thursday, with deeply strained relations of the two global rivals on rare public display during the meeting’s opening session in Alaska. Sparring in an unusually extended back-and-forth in front of cameras, U.S. Secretary of State Antony Blinken and national security adviser Jake Sullivan opened their meeting with China’s top diplomat Yang Jiechi and State Councilor Wang Yi in Anchorage, fresh off of Blinken’s visits to allies Japan and South Korea. “The United States uses its military force and financial hegemony to carry out long arm jurisdiction and suppress other countries,” Yang said.

THEMATIC CONTEXT: “China knows the path to dual-hegemony is access and ownership to vast commodity resources and critical logistic infrastructures and the South China Sea provides both. It is a key piece of geographical body that is pivotal to China’s de-dollarization ambitions and eventual push for a Sino-Centric Economic faction.” — 8th July 2020

“This is a key and strategic move by the U.S., using Taiwan to set up a geopolitical and political tripwire to further antagonize and stifle Chinese ambitions In East Asia. The fact that Washington is bound by law to rise to Taiwan’s defence is hugely unsettling for China and this will lead to more widespread repercussions. We are deeply entrenched in the Sino-American Thucydides Trap, understanding how to live and invest in a multi-polar world is increasingly important as new economic factions will emerge from this.” — 12th Aug 2020

“Both the South-China Sea and Taiwan are key geopolitical assets that from an American perspective, can never be allowed to fall into the hands of China. The South-China sea will give China control over 2/3rds of the world’s trade, supply-chain and logistics (amateurs study strategy, professionals study logistics) and Taiwan will provide China with a quantum leap in the tech war as the only thing holding them back from becoming the dominant global superpower is lack of advancement in semiconductor technology.— 25th Jan 2021

Paris goes into lockdown as COVID-19 variant rampages

Notable Snippet: France imposed a month-long lockdown on Paris and parts of the north after a faltering vaccine rollout and spread of highly contagious coronavirus variants forced President Emmanuel Macron to shift course. His prime minister, Jean Castex, said France was in the grip of a third wave, with the virulent variant first detected in Britain now accounting for some 75% of cases. Intensive care wards are under severe strain, notably in Paris where the incidence rate surpasses 400 infections in every 100,000 inhabitants.

THEMATIC CONTEXT: “Vaccine efficacy is a key development to monitor. Societies around the world have a bifurcation of sorts where some countries are still experiencing the full brunt of Covid-19 while others are having Covid-19 fatigue and just want to get on with their lives. Vaccine is the key to level the field with herd immunity and markets are clinging onto this hope. If severe allergic reactions halt the process, this will weigh on risk sentiment, what we need to know now is if these allergic reactions are within the scope of expectations.” — 7th Jan 2021

Germany, France among nations to resume use of AstraZeneca vaccine after regulators back shot

Notable Snippet: Germany, France and other European nations announced plans to resume using AstraZeneca’s COVID-19 vaccine on Thursday after EU and British regulators moved to shore up confidence in the shot, saying its benefits outweigh the risks. The AstraZeneca shot was among the first and cheapest of the COVID-19 vaccines to be developed and launched at volume and is set to be the mainstay of vaccination programmes in much of the developing world.

THEMATIC CONTEXT: “We are likely to see countries setting up travel bubbles with those with “successful vaccine drives”. This might be the preliminary Standard Operating Procedure (SOP) for the foreseeable future between countries who want to recommence business. In such scenarios, we believe there will be a positive impact on a country’s currency whose vaccine drive has a higher success rate and whose industry derives a decent portion from tourism (i.e. Japan, Europe) etc.” — 15th Mar 2021




Phan Vee Leung
CIO & Founder, TrackRecord

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