The last day of a long month saw the USD decline while US stocks rose sharply. It was the opposite for the month which saw the dollar index rise and stocks fall.
It may be a prelude to February, or it may just be a corrective move between overbought (for the dollar) and oversold (for stocks). Time will tell, but for today, the falling dollar and rising stocks were the trends of the day.
Looking from strongest to weakest, the AUD was the strongest of the major currencies ahead of their interest rate decision in the new trading day where rates are expected to remain unchanged but bond buying is expected to be concluded.
The USD was the weakest currency on the day, followed by the JPY, as “risk over” flows sent investors away from the relative safety of these two currencies for the day.
In US stocks, the S&P and Nasdaq posted their best two-day gains since November 2020, but also had their worst month since March 2020, underscoring the dichotomy of the past two days versus the rest of the month (and the future uncertainty).
For other markets:
- Spot gold is trading just below $1800 at $1796.80. That’s up $5.87 or 0.33%. For the month, the price closed last month at $1829.24 and reached a high of $1853.83, but bottomed out at $1778.50. The drop was 1.77%
- Spot silver is unchanged at $22.43. On December 31, it closed at $23.29. So, like gold, it closed lower for the month. The high is looking for $24.699 while the low extended to $21.957. The decline for the month was 3.6%.
- Crude oil is nearing the month’s highs at $88.09. That’s up $1.29 on the day. The end of the year saw the price close at $75.35, which was close to the low of the year at $74.30 hit on the first trading day of the year. The high for the month was also a 7-year high at $88.82. At $88.09, the price is up $13.79 on the month or +18.3%
- Bitcoin is trading at $38,458. It closed at $46,213 on December 31. The month’s high reached $47,989 on the first trading day of the month and reached a low of $32,950.72. at $38,458, the price is down $7,755 or -16.78%
On the US debt market, yields ended the day mixed but up over the month. Below are the day’s changes.
For the month, returns were above year-end levels:
- The 2-year yield rose from 0.736 to 1.815% today. The high yield of the month reached 1.228%
- The 5-year yield rose from 1.265% to 1.6135% today. The high yield of the month reached 1.701%
- The 10-year yield rose from 1.514% to 1.782% today. The high yield of the month reached 1.902%
- 30 years went from 1.905% to 2.113% today. The high yield of the month reached 2.215%
In the US stock market, although gains were strong for the 2nd day in a row, the major indices all ended the month down:
- Dow fell -3.32%
- The S&P index fell -5.26%
- The Nasdaq fell -8.96%
- Russell 2000 fell 9.7%
In Europe and Asia for the month:
- The German Dax fell by -2.6%
- The French CAC fell by -2.15%
- The UK’s FTSE 100 rose 1.08%
- The Spanish ibex fell by -1.16%
- The Italian FTSE MIB fell -1.95%
- The Japanese Nikkei fell -6.62%
- The Shanghai Composite Index fell -7.65%