Reflation back on as USD slides

Updated: Feb 18

In this week's Macro Insight trading call we discussed...

After bouncing from oversold levels, markets recovered strongly and took out new all time highs as virus cases dropped and with the next trillion dollar fiscal stimulus on the horizon. Asian equity markets outperformed whereas Europe lags as usual.


How an elevated VIX pre-correction signalled that a sell off would be short-lived and most likely a buying opportunity as there was no market complacency despite bullish positioning.


The recent Gamestop fiasco showed the high levels of speculative activity in stock markets right now due to retail traders using stimulus money to play markets. This is potentially diverting capital away from the real economy and into the stock market, and not even good quality companies.


After topping out at 91.5, the DXY heads lower and reignited the reflation trade and triggered risk on for both equities and commodities. AUDUSD looks like an interesting pair to play further dollar weakness due to the exposure to commodities and China growth.


10 year yields seemed destined for 1.50% as the inflation data ticked up. High yield markets are at highs but prices are distorted by FED intervention.


Still expected a retest of the lows on gold as the recovery takes hold. Will silver break higher first?


Filmed on Tuesday 9th February 2021.


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