Market Quick Take - December 3, 2021 Market Quick Take - December 3, 2021 Market Quick Take - December 3, 2021

Market Quick Take - December 3, 2021

Macro 6 minutes to read
Saxo Be Invested
Saxo Strategy Team

Summary:  Risk sentiment rebounded yesterday in the US session, erasing the rather steep losses of the prior day. Sentiment in Asia is also on the mend, while oil prices recovered all of the lost ground from an intraday plunge in the wake of the OPEC+ meeting yesterday. Today, focus swings to the US November jobs report, with extra focus likely on average hourly earnings data as investors watch for signs of a wage-price spiral developing.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - US equities bounced back yesterday after finding a new low for the current short-term cycle lower with Nasdaq 100 futures trading around the 15,975 level this morning in European trading. Long-term US interest rates are not moving much so we expect a quiet session unless the Nonfarm Payrolls for November throws a curveball at the market. In the medium-term risk in equities will be determined by pricing of interest rates hikes next year and updated information on the new Omicron variant of Covid.

Stoxx 50 (EU50.I) - Stoxx 50 futures are stuck in a stabilisation zone between 4,100 and 4,160 with the 100-day moving average at 4,157 which is obviously the key resistance level to watch today should we get risk-on. European equities remain pulled by two opposite forces with the first being that higher expected interest rates are positive for this value market, while the continent has the most to lose short-term from the Omicron variant. If the latter fades over the coming weeks, we expect investors to move back into European equities.

USDJPY and JPY crosses – With every day that passes and no follow-through lower unfolds after the recent omicron-variant inspired tumble from the 115.00+ level, the odds of a reversal back higher grow, though as we have mentioned often in this space, this would likely require that US yields lift all along the curve, not just near the front of the curve where Fed expectations operate the most forcefully. A fresh wave of weak global risk sentiment, on the other hand, could bring another wave of JPY strength, particularly in the crosses like AUDJPY and CADJPY, some of which saw their largest single-day moves since the pandemic outbreak early last year. For USDJPY, the downside pivot is now near 112.50.

USDCAD – USDCAD has rallied as the market has been adjusting to the more hawkish shift from the Fed, especially after this week’s testimony from Fed Chair Powell. As well, uncertainties and the real threat of a reduction in travel due to the new omicron variant of covid have taken down crude oil prices nearly twenty dollars from their late October peak, around the time USDCAD was bottoming out near 1.2300. Now it trades near 1.2800 and the top of the range (only intraday price spikes from August and September rose above this level) as oil has staged a significant rebound yesterday. If risk sentiment can stabilize and oil prices recover, this important 1.2800+ area resistance could hold.

Crude oil (OILUKFEB22 & OILUSJAN21) trades up 8% from yesterday’s low point after the OPEC+ group of producers adopted a flexible approach on supply while at the same time agreeing to maintain the current rate of production increases. The market gripped with omicron angst this past week rallied on the news due to several reasons 1) the market had already priced in a significant and not yet realised reduction in demand, and 2) it the meeting was left “in session” meaning changes can be made before January 4. 3) the move eased political tensions with large consumers, 4) some of the SPR barrels on offer may not leave storage due to lack of demand from refineries, and 5) members with spare capacity wanted to increase production, as the group has not delivered the promised increases due to some struggling to reach their quotas. The next upside level to watch being the 200-day moving average at $72.85.

Gold (XAUUSD) slumped to a one-month low at $1762 yesterday, as the dollar strengthened in response to robust economic data, before finding a small bid from recovering crude oil prices. Otherwise, it has been another troubled week, the third in a row, with the yellow metal struggling to put up a defense against the Fed’s changed focus from employment to combatting inflation. In addition, the spreading of the omicron variant and its potential threat to the economic recovery has so far failed to support prices despite driving bond yields sharply lower and the VIX higher. Silver (XAGUSD) has struggled even more given its industrious link with XAUXAG ratio trading near a two-month high. Focus today being the US job report with the first major upside level of interest in gold being $1792 with support at $1760.

US Treasuries (IEF, TLT). Today the focus is on the nonfarm payrolls numbers, as a better-than-expected report would confirm the intention of the Federal Reserve to taper at this month's FOMC meeting. The US yield curve continued to bear-flatten yesterday as Fed’s speakers including Bostic, Daly, Quarles, and Barkin commented on the possibility of a faster tapering to open for rate hikes next year. Two-year yields rose by 8 bps, while five-year yields cheapened by 5bps. Long-term yields dropped contributing to an increased flattening of the yield curve in the 2s10s and 5s30s areas. In the meanwhile, Eurodollar futures have started to price rates cut in 2025. We expect the flattening of the yield curve to continue until Covid distortions are eased. Afterward, the long part of the yield curve will need to shift much higher adjusting to interest rate hikes expectations.

US junk bonds (HYG, JNK). According to Bloomberg Barclays indexes, junk bonds’ OAS widened by 30bps to 330bps amid last Friday’s selloff reflecting the lack of liquidity in markets. Despite negative real rates continuing to support corporate bond valuations, it’s safe to expect junk bond spreads to widen throughout the end of the year amid poor liquidity. If the volatility in rates remains sustained, the widening of spreads could accelerate, posing a threat also for stocks.

German Bunds (IS0L). Rate hikes expectations for the eurozone were pushed to 2023 yesterday amid a slump in tech stocks. German and Italian government bonds more than reversed Wednesday’s losses. In Europe, Covid distortions are keeping bond yields in check. However, when Covid fears ease we can expect yields in the euro area to adjust higher given the inflationary backdrop and the new German government.

What is going on?

Omicron covid variant cases rise, reinfection risk judged high in one study. South African officials note that the omicron variant of covid is spreading faster than the delta- or any other variant of the virus despite estimates by some that a majority of the South African population was infected with covid in prior waves. National cases were at 11.5k yesterday versus 8.6k on Wednesday and 4.4k on Tuesday. A study there of the reinfection risk suggests that it is some three times higher than prior variants. Omicron variant cases have now been discovered worldwide, including Italy, the US and South Korea.

DocuSign shares plunge 30% in extended trading. The company guided Q4 revenue of $557-563mn vs est. $574mn which is a small revenue miss, but enough to spark a massive selloff in extended trading. Investors took clearly little comfort in the fact that the company is consistently improving operating margin hitting 3.1% in Q3 and expected to climb significantly in the coming quarters.

China moves to delist Didi from US exchanges. US SEC set to move against Chinese listing. The Chinese ride-sharing and transportation platform company will delist in the US and move to a Hong Kong listing, perhaps in the March time frame. Meanwhile, the US SEC is set to move against a number of Chinese companies listed on US exchanges on charges that their accounting disclosures are not in compliance with US regulations.

Another strong US weekly jobless claims number was out yesterday at 222k, lower than expected and near the levels during the strong labor market before the early 2020 pandemic outbreak. The prior week’s number was one of the lowest ever and was revised even lower to 194k, suggesting a very tight labor market.

What are we watching next?

Study of omicron variant and its virulence. Scientists will work with the provincial government of Gauteng in South Africa, which has the most measured cases of the new omicron variant, to complete a study of the new variant’s virulence as soon as next Tuesday, though results will be released to the public later. A local official there said that hospitalizations and mortality are lower than expected thus far.

US November Nonfarm Payrolls Change and Average Hourly Earnings today. With the US economy operating at full capacity according to estimates from CBO, continued strong job gains will add fuel to the “inflation fire”. Wednesday's 534k increase in the November ADP private payroll number suggests that the job market growth remains healthy in the US as we await the official nonfarm payrolls numbers today (expected to show 500k+ jobs added), where strong upward revisions to prior months’ data has been a notable trend this year due to data collection issues. As well, Average Hourly earnings numbers will be closely watched for any budding signs of a wage-price spiral, as a constrained supply of labor could see companies bidding up wages and October showed a strong rise in earnings at a faster pace than at any time from the start of the survey in 2007 to the outbreak of the covid pandemic. The October Average Hourly Earnings number rose to 4.9% year-on-year, and 5.0% is expected for today’s November number.

Earnings Watch – today is a quiet day on earnings with only Bank of Montreal reporting earnings. We have also put in next week’s earnings releases.

Friday: Bank of Montreal

Next week’s earnings:

Monday: Sino Pharmaceutical, Acciona Energias, MongoDB, Coupa Software, Gitlab

Tuesday: SentinelOne, AutoZone, Ashtead Group

Wednesday: Huali Industrial Group, GalaxyCore, Kabel Deutschland, Dollarama, Brown-Forman, UiPath, GameStop, RH, Campbell Soup

Thursday: Sekisui House, Hormel Foods, Costco Wholesale, Oracle, Broadcom, Lululemon Athletica, Chewy, Vail Resorts

Friday: Carl Zeiss Meditec

Economic calendar highlights for today (times GMT)

0815-0900 – Euro Zone final Nov. Services PMI

0900 – Norway Nov. Unemployment Rate

0930 – UK Nov. Final Services PMI

1100 – UK Bank of England’s Saunders to speak

1300 – ECB Chief Economist Philip Lane to speak

1330 – US Nov. Change in Nonfarm Payrolls

1330 – US Nov. Average Hourly Earnings

1330 – US Nov. Unemployment Rate

1330 – Canada Nov. Net Change in Employment

1330 – Canada Nov. Unemployment Rate

1415 – US Fed’s Bullard (voter in 2022) to speak

1500 – US Nov. ISM Services

1500 – US Nov. Factory Orders


Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.