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From the Floor: US yields keep climbing, stocks stumble — #SaxoStrats

   • Markets eyeing Trump State of the Union for tough trade talk
   • Lame-duck FOMC not expected to surprise Wednesday
   • US equities retreat from Friday peaks in weak Monday session
   • 'Bulls still in control' on the S&P 500: Larsson
   • Nasdaq Composite showing signs of exhaustion

Michael McKenna

"We saw an interesting start to the week Monday", says Saxo Bank head of FX strategy John J Hardy, pointing to the developing risk-off tone across asset classes and bond yields continue to rise and equities dip from Fridat's record highs.

"The risk-off move is favouring both the dollar and the yen," Hardy adds, stating that GBPJPY could be an interesting reversal candidate given sterling exhaustion and a safe-haven bid for JPY.

"One thing to watch is Japanese government bond yields... the 10-year has reached the 0.10% level, which is where the Bank of Japan's yield curve control policy kicks in, so we could see a test of the BoJ's commitment soon," Hardy reports.

S&P 500
Source: Saxo Bank 

Although the S&P 500 was sharply off Friday's peak yesterday, dropping 0.67% to 2,853.53, Saxo technical analyst Kim Cramer Larsson still sees the bulls as being in control en route to a possible test of 3,000 later this year.

In the Nasdaq Composite, however, Larsson cites RSI divergence and a broad stall of the bull push at 7,500 as signalling potential exhaustion; key support lies at 7,375 and 7,100 with 6,900 as an important downside level to watch.

Larsson also sees less-than-bullish developments playing out across the Dax, Russell 2000, and Apple charts. 

For more on technical analysis, macro data, and FX, watch today's Morning Call in full.

Michael McKenna is head of editorial content at Saxo Bank 


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