Relief in the equity markets after the Fed meeting was short-lived - yet another spike in Treasury rates knocked down oil, growth stocks. Nasdaq lost 3.02%, the biggest daily drop in several months. Oil closed with 7.6% loss, with maximum decline reaching 9%. Oil market rout was the most intense since October last year.

Markets are increasingly nervous about the situation with coronavirus in the EU countries, where lockdowns, disastrous for economic activity, are either reintroduced or extended. Increasing incidence rate in Germany does not let the government to ease restrictions, with third lockdown in sight as hinted by the local Ministry of Health today. The outlook for economy reopening deteriorates. The recent backwardation in term structure of Brent and WTI (when short-range contracts are more expensive than long-range contracts), which indicated strong current demand, is either decreasing or turning into contango (short-range contracts become cheaper than long-range contracts). Basically, time spreads in oil indicate a pause in the uptrend.

On the daily chart, the drop was picked up exactly on the 50-day DMA:

In the short term, the former uptrend line (point 61.50) will already act as a barrier to growth. After such a strong fall, the shock to buyers is unlikely to pass quickly - the most likely development of the market is a sideline movement with a retest of $60 round support before the market gathers strength and continues to rise as there are plenty of reasons for this.

The dollar should also contribute to the moderate dynamics of oil. The fact of the approval of fiscal stimulus has been priced in, but it remains uncertain how much households will spend in consumption and how much will go into savings. In the data, this will manifest itself gradually. What has not been fully taken into account in asset prices is the high rate of vaccination in the United States, which will allow the lockdown to be completely lifted earlier than previously thought. We all know what consequences such expectations have for the Treasury market (continuing increase in nominal rates). By the way looking at weekly timeframe it becomes clear that the Treasury rates are at their historical low, so the recent increase is a drop in the ocean, so to speak. The growth in February-March on the scale of decades is just a minor rebound from the all-time bottom. Further expansion of interest rate differential (US rates minus other countries rates on fixed income) may turn more capital flows into US assets which is a factor in the demand for the currency.

Technically, the steep uptrend of the dollar broke off the week before last - the index went into the range, 91.40 - 92.00, the Fed could not help. Exit from the range in my opinion is upwards, we can consider the target 92.50 (the previous March high):

In gold, the main driver is related to the reasoning above -real interest rates in the US. This is the opportunity cost for gold (what wemiss in terms of return with the same level of risk when we choose to holdgold). The real rate is rising and based on US growth forecasts, the comingconsumer boom will be higher this year. Therefore, all upward movements ofgold, within the framework of close correlation with the real rate, arerebounds in the downtrend:

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