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Chart of the Day

Oil prices were little changed yesterday despite moves elsewhere that would normally be associated with them falling - i.e. lower equities, a stronger dollar, and falls in other commodity prices. That is one sign the recent rise in the price of WTI, to above $50, should be sustained. At that price level, the US rig count should start rising again which, in turn, could eventually act as a headwind to prices. Perhaps more importantly though, most analysts expect that supply response to be slow and so see further gains in prices this year - many banks are calling for WTI to rise above $60.

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Macro

Inflationary pressures are picking up again in China, both in terms of consumer and producer price inflation.

Markets

Every other Tweet yesterday seemed to be about the plunges in bitcoin and ethereum, with the latter at one point down by almost 40%, although both recovered some of their lost ground.

The electrical vehicle stocks were generally also hit yesterday, although Nio continued to surge - now up by almost 1500% in a year.

The modest downward moves in broader equity indices yesterday was accompanied by small rises in equity and bond market volatility.

There were perhaps some more important price declines for macro investors, with copper shedding 3% - although it too had risen strongly in the past week, so remains above the level where it closed 2020.

US bond yields rose further, but at a much slower pace than toward the end of last week - obviously a key question here about whether the move was a one-off reaction to the Georgia run-off results or the start of a trend.

The high-yield corporate bond spread, i.e. vs investment grade, is now 30 bp below the pre-virus level - thanks to Fed asset purchases, of course.

Short dollar was a crowded trade at the start of the year, so of course, it has appreciated in the past few days - in part because of the rise in real yields in the US vs elsewhere since the Georgia run-offs.

It really was a dollar day, given the USD rose against every other major currency.

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