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It’s the return of king Dollar! At least for this week as broad risk sentiment soured on Thursday thanks to rapidly rising bond yields. Traders fled risk assets in droves, benefitting the Greenback into the weekend.

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart
USD Weekly Performance from MarketMilk
USD Weekly Performance from MarketMilk

United States Headlines and Economic data

Monday:

Yellen favors higher company tax, signals capital gains worth a look

“A wealth tax has been discussed but is not something President Biden” favors, Yellen said at a virtual conference on Monday hosted by the New York Times. She said such a tax would have significant implementation problems.

Yellen also said that a hike in the capital-gains tax might be something “worth considering.” Asked about a financial-transactions tax, she said, “One would have to examine closely what effect it would have” on ordinary investors.

Yellen sounds warning about ‘extremely inefficient’ bitcoin

“I don’t think that bitcoin … is widely used as a transaction mechanism,” she told CNBC’s Andrew Ross Sorkin at a New York Times DealBook conference. “To the extent it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.”

Texas Factory Activity Surges in February Despite the Cold Weather — Dallas Fed

“The production index of the Texas Manufacturing Outlook Survey, a key measure of state manufacturing conditions, came in at 19.9 in February, up from 4.6 in January and indicative of a sharp acceleration in output growth.”

“In line with the production index, the index for general business activity rose to 17.2 in February from 7.0 the previous month. The reading beats forecasts from economists polled by The Wall Street Journal, who expected it to come in at 5.0.”

U.S. House budget panel approves $1.9 trillion COVID-19 aid bill

“Senate Majority Leader Chuck Schumer said later that efforts in the House and Senate have kept the bill on track to be approved by both chambers and sent to Biden for his signature before federal unemployment benefits expire on March 14.”

Tuesday:

Fed’s Bowman says U.S. economy ‘substantially’ recovered, but unevenly so

Powell says inflation is still ‘soft’ and the Fed is committed to current policy stance

“Following large declines in the spring, consumer prices partially rebounded over the rest of last year. However, for some of the sectors that have been most adversely affected by the pandemic, prices remain particularly soft,” he said. “Overall, on a 12-month basis, inflation remains below our 2% longer-run objective.”

Richmond manufacturing index hits a new high at 46 in February vs. 39 in January

“Survey results indicated that many
manufacturers increased employment and
wages in February. However, finding workers
with the necessary skills was difficult.
Respondents expected this difficulty to
continue in the next six months.”

“The average growth rates of both prices paid
and prices received by survey participants
rose in February, as growth of prices paid
continued to outpace that of prices received.
Manufacturers expected this gap to narrow in
the near future.”

Fed Chair Powell’s prepared remarks to Congress, Feb. 23, 2021

U.S. CB consumer confidence index up from 88.9 to 91.3 vs. 90.2 consensus

Consumers’ assessment of current conditions improved in February. The percentage of consumers claiming business conditions are “good” increased from 15.8 percent to 16.5 percent, while the proportion claiming business conditions are “bad” fell from 42.4 percent to 39.9 percent.

Wednesday:

U.S. Weekly mortgage application volume drops 11% as rates spike and Texas power outages hurt demand

“The average contract interest rate for 30-year fixed-rate mortgages increased to 3.08% from 2.98% last week.”

U.S. new home sales exceed expectations in January

“New home sales rose 4.3% to a seasonally adjusted annual rate of 923,000 units last month. December’s sales pace was revised higher to 885,000 units from the previously reported 842,000 units. Economists polled by Reuters had forecast new home sales, which account for 12.1% of U.S. home sales, climbing 2.1% to a rate of 855,000 units in January.”

Fed’s Clarida sees brighter economy in 2021, but he’s not worried about inflation

Thursday:

First-time jobless claims fell to 730,000 for the week ended Feb. 20, the Labor Department said Thursday.

“Continuing claims hit a fresh pandemic-era low just above 4.42 million.”

Fed’s George says rise in long-term rates a sign of optimism

“The FOMC is positioned to be patient as it follows the outlook for the virus and the economy,” George said. “It is too early to discuss pulling back on accommodation given continue elevated unemployment, below-target inflation, and the uncertainties surrounding the outlook.”

Orders for U.S. durable goods climb 3.4% in January

“Orders for civilian aircraft and parts jumped 389.9%. Excluding transportation equipment, which can bounce wildly from month to month, durable goods orders were up a solid 1.4%.”

U.S. Real gross domestic product (GDP) increased at an annual rate of 4.1% in the fourth quarter of 2020

Global government bonds hit by fresh wave of selling

“US 10-year Treasury yield jumps above 1.4% for first time since start of Covid crisis”

Friday:

Personal income leaps 10% in January thanks to stimulus, but inflation still in check

Core PCE index increased 0.3%, above 0.1% expectations

Personal income increased $1,954.7B (10.0%) in January according to estimates released by the Bureau of Economic Analysis