Daily Close | Forex, Metals, Oil, Agriculture May 07, 2021



less The U.S. dollar traded sharply lower against all of the major currencies on the back of what can only be described as an abysmal non-farm payrolls report. With that said, the weak jobs report and the rise in stocks should keep the U.S. dollar under pressure. Capital flows into and out of bonds, the US dollar, and leading alternative assets like gold and cryptocurrencies are heavily influenced by stock-market fortunes.

United States

The big questions for traders and investors alike are thus: will the Fed’s regime of low rates continue to entice homebuyers as mortgage rates remain historically low? But while bulls think the resulting super-high stock prices are righteous given the US economic recovery, bears are convinced they are an exceedingly dangerous Fed-blown bubble. closed sawmills) have helped lift lumber prices to all-time highs, leading to over a $35K increase in new home prices in the US since the start of 2021.
In the year leading into that stock panic, the Fed’s balance sheet grew a normal 4.6% or $184b. The carnage has been spread across the market, with high-flying stocks, like Roku (NASDAQ:ROKU), Twilio (NYSE:TWLO), and Zoom Video (NASDAQ:ZM) plunging. In March 2020 as stocks plummeted in a lockdown-induced panic, Fed officials were terrified the negative wealth effect would spawn another depression. Everyday Americans are taking notice of the state of the US housing market too.
Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) are other examples of a few stock struggling to rally, despite strong results. With stocks riding an extreme deluge of Fed money printing, selloffs are minor and far between. This table outlines key fundamentals of the 25 largest companies in the US stock markets. Investors sold U.S dollars across the board which is the reaction you’d expect to such a soft release. The Fed’s balance sheet, which is a proxy for the total number of US dollars in circulation, surged by 4.4% or $326b in Q1’21 alone.
The US housing inventory is at its lowest level in four decades, while supply chain issues (e.g. It took a few seconds, but equity futures began rising in response, with most of the rally coming in NQ, the Nasdaq 100 E-Mini. But pockets of office-related spending have already been popping up all over the place in industrial earnings reports, suggesting the trend extends beyond Wall Street. Yet traders think the Fed has rendered material selloffs extinct.
Virtually all traders agree the Fed’s largesse fueled this extraordinary US-stock-market rally. From the ends of Q1’20 to Q1’21, the Fed’s balance sheet skyrocketed 46.3% or $2,435b! The narrative changed immediately to “this keeps the Fed on the sidelines”. “That’s a crucial distinction for the Fed.