Markets are mixed this morning after yesterday’s price action which saw markets lower for the second day in a row led by major tech names. We continue to see mixed messaging around a vaccine as well as further fiscal stimulus. Expect volumes and volatility to be heightened today as Wall Street braces for a quadruple witching. This refers to a day on which stock index futures, stock index options, stock options, and single stock futures expire simultaneously.
Government bonds remain well bid, with yields across Europe, Canada and the U.S. lower on the day. Inflation expectations measured by 5-year breakeven are also beginning to move lower after peaking at the beginning of the month. This can explain part of the recent slide in yields along with a shift in risk sentiment.
The currency market is all over the place. U.S. and Euro pairs are mixed, the Yen is strongest of all the majors typically a clear sign of risk-off sentiment. Loonies are lower against the U.S. dollar but are holding their own versus other commodity exporting countries such as Australia and Norway. Oil markets are weaker following yesterday’s surprise advance on the stern words Saudi Arabia had for other OPEC members who are cheating their quotas and traders betting on oils collapse
."Saudi Energy Minister Prince Abdulaziz bin Salman dropped clear hints that there could be a change of direction in production policy before the group’s next ministerial meeting in December. “We will never leave this market unattended,” he said. “I want the guys in the trading floors to be as jumpy as possible. I’m going to make sure whoever gambles on this market will be ouching like hell.”
The Fed has indicated that they can only do so much to ensure the economic recovery continues, as much of the heavy lifting must come from fiscal policy. CNBC notes
that this could be aided by commodity-intensive infrastructure investment setting the stage for continued strength in base metals and eventually filter its way down to oil.
The U.S. is on the cusp of a grim milestone, it will likely top 200,000 deaths in the coming days, roughly eight months after it first started to appear. With just 4% of the world population, the U.S. accounts for just over 20% of global coronavirus deaths. Sure, without accurate recording and tracking in developing nations these numbers are likely off a little, but this does not hide the fact that before years end the death toll will be higher than even some of the most pessimistic models developed in the early months. It’s our job to monitor the markets and the recovery has been remarkable, but it’s not lost on us the truly tragic situation the virus has brought on so many individuals and families.
Meanwhile, in Canada daily cases are now double what they were in July and Ontario is lowering the number of people permitted at social gatherings in Toronto, Peel Region and Ottawa. The changes – only 10 people allowed to gather indoors and 25 outdoors. These will not apply to businesses such as restaurants and banquet halls.Diversion: This is what sweat production looks like up close
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