Trade remains high on Washington’s agenda - ANZ

Analysts at ANZ explained that the USD continued to regain some poise in the aftermath of President Trump’s Davos speech and less anxiety that the US is about to depart materially from the G20 Accord and competitively devalue the USD.

Key Quotes:

"There is no doubt that trade is high on Washington’s agenda this year, but last week’s heightened anxiety about currency and trade wars is receding for now. Politics aside, the growth backdrop in the US remains firm, helping to push bond yields higher.

The 0.4% m/m rise in December personal spending and the drop in the savings rate to 2.4% confirmed the momentum behind consumer spending as strong wealth effects and high levels of confidence support consumer appetites. Bond yields continue to reflect that.

The yield on the US 10-year note rose 4 bps to above 2.70%.

The US bond market is not alone – the German 10-year bund yield rose 7 bps to 0.69%, and the French 10-year yield rose 6bp. In the face of the bond market sell-off, equities traded defensively. The S&P 500 fell 0.4%, the DAX was off 0.1% and the FTSE 100 was up 0.1%. Oil gave back some of its recent gains, with WTI falling 1.0% to USD65.5/bbl.

Gold was down 0.5% to USD1342/oz at the time of writing."