Last week, markets were surprised by the release of many positive economic data from the United States, which led to an increase in bond yields. The main reason that contributed to boosting investor sentiment was the retail sales, which performed positively and exceeded market expectations.
The National Bank of Kuwait said in a report reviewed by (Namazone), today, Sunday, that this increase came in conjunction with the launch of vaccination programs and the slowdown in the spread of the Covid-19 virus. Globally, as investors started to consolidate the trading momentum based on expectations of economic recovery.
This term refers to the period during which investors expect economic activity to grow at rates higher than expected and thus increase the appetite for selling safe haven assets such as treasury bonds and buying high risk assets. .
US 10-year Treasury yields fell to 1.28%, after rising to 1.33% during daily trading.
On the other hand, US 10-year Treasury yields have risen by 43 basis points since the beginning of December, and the dollar index has declined by 1.0%, highlighting the weakness of the relationship between rising yields The long-term US Treasury and the strong recent performance of the US dollar.
However, market participants are still concerned about the sharp rise in US bond yields and the consequent rise in the value of the US dollar, which may worsen as a result of the continued increase. Short selling.
Positive economic data
The retail sales data surprised the market, recording a growth of 5.3% in January compared to the performance of December 2020, while economists' forecasts indicated an increase of only 1.1%.
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The core retail sales data also jumped by 5.9% against consensus showing an improvement of 1.1%.
Industrial production grew at a higher rate than expected in January, with a growth rate of 0.9% on a monthly basis, against expectations of only 0.4%.
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It is worth noting that industrial production had registered a growth of 1.3% in the previous month.
