AMERICAN EQUITIES MIXED AS BOND YIELDS FLASH WARNING SIGNS

American equities were relatively mixed on Monday as investors watched the performance of the bond market and the war in Ukraine. On Monday, the yield curve inverted for the first time since 2016 as the yields of shorter-term bonds outperformed the longer-term ones. The 10-year yield retreated to 2.45% while the 30-year yield was about 2.50%. The performance of these bonds is a sign that the market is now pricing in a recession as the Fed embraces a more hawkish sentiment. Officials have warned that they could be forced to implement several 50 basis point rate hikes in upcoming meetings. Some of the top movers in Wall Street were firms like AMC, Gamestop, Coinbase, and Tesla.

The US dollar index rose slightly as investors waited for the upcoming consumer confidence data. Economists expect that data by Conference Board will show that the country’s confidence declined slightly in March as inflation concerns remain. They see the confidence number falling from 111 in February to 107 in February. Last week, a similar number by Michigan University showed that confidence declined to the lowest level in about a decade. The Bureau of Labor Statistics will also publish the latest job openings numbers.

Cryptocurrency prices continued doing well in the overnight session even as the yield curve inverted. Analysts expect that Russia and other countries will start to embrace Bitcoin as a means of exchange or store of value. For one, western countries like the US have deployed their currencies as a form of economic warfare. Also, there is optimism that some countries will embrace more user-friendly regulations this year. Bitcoin prices rose to over $48,000 while the total market cap of all digital currencies rose to over $2 trillion.

EURUSD

The EURUSD pair remained in a consolidation mode as investors watched the performance of the American bond market. It is trading at 1.0970, where it has been in the past few days. This price is along the 23.6% Fibonacci retracement level. It has also moved slightly below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the neutral level. Therefore, the pair will likely remain in this range today.

GBPUSD

The GBPUSD pair has been in a strong bearish trend in the past few days. It is trading at 1.3087, which is close to the lowest level since March 17. It has moved below the ascending channel shown in brown and the 25-day moving average. Further, the pair has moved below the important support level at 1.3117 while oscillators are pointing downwards. Therefore, the pair will likely have a bearish breakout in the coming days.

XNGUSD

The XNGUSD pair has been in a bullish trend because of the ongoing crisis in Russia. There are expectations that Russia will limit the flow of natural gas to some European countries, which will lead to shortages. It is slightly below the upper side of the ascending channel and is also slightly above the 25-day moving average. Therefore, the pair will likely maintain its bullish trend.