1) Dr. Anthony Fauci, MD has issued a new chilling warning about the Covid virus. A new strain from South African, known as the 501Y.V2 variant, is showing itself to be an even greater threat than the variant that started the pandemic. Experience shows that the South Africa virus has a very high rate of reinfection to the point where previous infection does not seem to protect you against reinfection with the South African variant. While research has shown that the current Covid vaccines may be less effective against the South African strain, there is no evidence that any of these new strains are completely resistant to the vaccines currently available. Nevertheless, the South African coronavirus mutation (B.1.351) poses a risk of reinfection to people who have already had Covid-19 and the vaccine efficacy may also be impacted. However, the number of daily coronavirus infections in the US has been dropping for a couple of weeks, but it’s still well over 100,000 per day, while the number of vaccinations is more than 32 million first dose. This isn’t enough to impact the course of the epidemic and significantly reduce transmission.
2) While the fears of a Treasury sell-off has tailed off, after the big move in the 10-year Treasury at the start of the year, the factors that led to that brief sell-off in Treasurys are very much still at hand. Chief among them are the rollout of Covid-19 vaccines, the huge fiscal stimulus already enacted with more in the pipeline, the pent-up spending power in household savings, and the easy monetary policy. Computer models say a perfect storm is being unleashed, with estimates that the 10-year Treasury yield will jump 162 basis points this year and another 160 basis points next year. This is well ahead of market estimates of roughly 17 basis points of gains in each of the next two years. The model doesn’t include the effects of any additional fiscal stimulus from the Biden administration, with its proposed $1.9 trillion dollars.
3) Experts consider gold futures are set to see a decline, which technical strategists believe may underscore a bearish trend in the yellow metal. Called a ‘death cross’, which occurs when the 50-day moving average, that many chart watchers use as a short-term trend tracker, crosses below the 200-DMA, which is widely viewed as a dividing line between longer-term uptrends and downtrends. The idea is that the cross marks the spot that a shorter-term sell-off can be defined as a longer term downtrend. The potential formation of a death cross, which reflects the recent slump in trading, comes as gold has experienced whipsawing action after the precious metal tumbled 1.6% on Tuesday.
4) Stock market closings for – 4 FEB 21:
Dow 31,055.86 up by 332.26
Nasdaq 13,777.74 up by 167.20
S&P 500 3,871.74 up by 41.57
10 Year Yield: up at 1.14%
Oil: up at $56.46