Wednesday 24 March 2021 11:00 am

City A.M. TV: Daily Market Snapshot (video)

The rotation out of the recent winners (especially the ‘reflation trades’) continued yesterday.

In particular, the oil price was sharply lower (-6%); bond yields continued to ease, with the US 10 year yield off again (by 6bps); and the Russell 2000 was notably weak (-3.6%, i.e. given its ‘reflation’ and energy exposure). On this occasion, the beneficiary of that rotation was some of the defensive sectors, with the S&P500 staples, utilities, and real estate sectors all higher on the day. As we show in this brief clip, recent weakness in a number of key asset prices has pushed our short term models lower. Many of which suggest that this bout of risk aversion is now ‘long in the tooth’.

Read more: Surging services demand boosts UK business activity rebound in March

Key macro data today includes flash Markit manufacturing and service sector PMI estimates for the month of March (for a number of countries including the US, the UK, Germany, and France). US durable goods orders for February are due at 12:30pm London time. Key events today include testimony by Powell and US treasury secretary Yellen (i.e. to Congress at 2pm) as well as speeches by the Fed’s Daly and Evans.