Powell to acknowledge yield volatility, claims not too bad, bitcoin consolidates

US equity markets eye Powell Speech

US stocks are awaiting Fed Chair Powell’s pivotal moment of the trading week.  It is all about the bond market and Fed Chair Powell will likely acknowledge he is watching the developments with both the short and long end of the Treasury curve.  Wall Street is unconvinced that the Fed can control the problems with both the elevated volatility with the long end and short end negative risks.  For stocks to get their groove back and focus on the COVID vaccine-driven outlook, Powell needs to send a stronger dovish commitment than last week and concern over financial conditions if elevated volatility remains on the backend of the curve.

Stocks gave up earlier gains after US Commerce Secretary Raimondo stated that China needs to be held accountable on human rights issues.  Relations between the world’s two largest economies have taken a backseat to vaccine and policy-driven outlooks, but that won’t be the case for much longer.

Claims

This week’s jobless claims rose 745,000, a tad better than forecasts and above the upwardly revised 736,000 prior reading.  The deep freeze impacted is still being unwound in this week’s reading, but still shows that claims have stabilized.  Continuing claims came in as expected at 4.3 million.  The number of Americans participating in all unemployment insurance programs declined by one million, but still remains elevated at 18.02 million.  Democrats should still have enough ammunition to push Conservative democrats on agreeing with a final price tag around the upper range for Biden’s stimulus plan.

High-frequency measures of the US economy have been improving since mid-February except for the deep freeze that hit the south.  Job growth is widely expected by most economists for tomorrow’s nonfarm payroll report.  A disappointing nonfarm payroll report could mean the difference of a couple hundred billion dollars in the size of Biden’s COVID relief bill.

Bitcoin

Bitcoin appears to be entering a consolidation phase that could last a few weeks.  The rally towards USD58,000 will likely remain short-term resistance for bitcoin.  Bitcoin interest continues to grow, but right now Wall Street can’t take their eyes off the bond market.  Treasuries could have a massive move today and that will likely determine if we have a major unwind of risky assets that could drag bitcoin lower.

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