Riskon Mood as Biden Moves Closer to Presidency

Note  The table above is updated before publication with the latest consensus forecasts. However, the text charts are prepared ahead of time. Therefore there can be discrepancies between the forecasts given in the table above and in the text charts. 

Rates as of 0500 GMT

Market Recap

The FOMC statement was virtually the same as in September. The only meaningful change was the date. Powell emphasized the same points in the press conference that hes been stressing for some time, namely the risks to the outlook from the pandemic and the need for more fiscal stimulus.

One wag on Twitter summed up the FOMC statement as follows 

Blah blah blah Risks

Blah blah blah Virus 

Blah blah blah Jobs 

Blah blah blah Inflation

Blah blah blah Use all tools

All were unanimous.

I think we can sum up the markets pretty nicely in the same way   

Election election election

Pennsylvania Georgia Arizona

Count count count 

Trump Trump Trump lies lies lies

Buy buy buy stocks

Sell sell sell dollars

Most of the market moves can be explained as a function of the riskon environment flowing from the assumption that Biden is likely to win the US election while the Republicans are likely to retain control of the Senate. While Trump is gaining on Biden in Arizona, Biden is gaining on Trump in Pennsylvania and Georgia. If Biden wins Pennsylvania, thats it. 

US stocks continued to gain yesterday SP 500 1.95, NASDAQ 2.59. The rally has run out of steam somewhat this morning. Asian…

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