Our websites use cookies to offer you a better browsing experience by enabling, optimising, and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy and our privacy policy.
Last week's tumultuous market movements have given way to a calmer scene, with the S&P 500 closing higher and US 10-year yields dropping below 2.9% by the February 16 close, but that's doesn't mean that volatility won't flare up again. "Volatility has fallen but we're not out of the woods yet and any 'good' economic data could spark further nervousness," says Althea Spinozzi of Saxo Bank's bond trading desk.
John J Hardy, Saxo's head of FX strategy, notes that the US dollar's gains against its peers have come "with no obvious catalyst besides the resumption of risk appetite" so tracking the market's willingness to accept risk will be key to the coming week's developments. One feature that should be closely monitored is China's response to US president Trump's suggestion of tariffs on imports of steel and aluminium, as this protectionist move could trigger harmful retaliatory action.
In equities, the S&P 500 may have recovered about half of its recent decline but the main question now is whether the rebound can extend, says Peter Garnry, Saxo's head of equity strategy. "The VIX index remains above average and could easily become more volatile again," he says.
Finally, risks of another kind are at play in the crude oil market, following a flare-up in tensions between Israel and Iran at the weekend, which, says Ole Hansen, Saxo's head of commodity strategy, is supporting the price of crude although soaring shale production is still likely to keep the market capped.
Brent crude oil has retraced 38.2% of its recent rally:
Quarterly Outlook
01/
Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers: Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification) Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)
None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.