Market Quick Take - June 8, 2020 Market Quick Take - June 8, 2020 Market Quick Take - June 8, 2020

Market Quick Take - June 8, 2020

Macro 3 minutes to read
Steen Jakobsen

Chief Investment Officer

Summary:  Asian stocks have started the week with gains in response the strong rally in US stocks on Friday following the supposedly stronger-than-expected US job report while European equities are down as skepticism grows over the Franco-German joint debt deal. The dollar index trades close to unchanged after hitting a three-months low on Friday. Focus now turns to the Federal Reserve's policy meeting this week with the recent jump in bond yields potentially forcing a reaction from the FOMC with regards to yield-curve-control.

What is our trading focus?

  • US500.I (S&P 500 Index) and USNAS100.I (NASDAQ 100 Index) – U.S. equity futures rose aggressively on Friday sending the Nasdaq 100 to a new all-time high. Sentiment remains strong in US equities and potential yield-curve-control announcement (directly or indirectly) on the FOMC Meeting on Wednesday could extend momentum further. S&P 500 futures flirted with the 3,200 level both on Friday and this morning basically erasing the losses year-to-date.

  • OILUSJUL20 (WTI crude) and OILUKAUG20 (Brent crude) - Crude oil has extended its dramatic run of gains following the weekend agreement to extend current production cuts to July. The technical levels that are being targeted are the March 6 closing gaps, on WTI at $41.05/b and Brent at $45.18/b. However, with decision almost priced in already last week, the question now remains how much further the current bullish momentum can carry it higher before the rally becomes self-defeating. The market may soon begin to focus on rising production after July from core OPEC members, Libya is showing signs of returning production while the rally has invited US producers back online. The demand recovery could be at risk due to the risk of second waves.

  • XAUUSD (Spot gold) - closed last week at its lowest since April 17 and US 10-year real yields at its highest since April 20. Thereby continuing their close inverse correlation. The move triggered by the better-than-expected US jobs numbers sent stocks sharply higher while raising questions about the need for haven assets. The focus will turn to Wednesday’s FOMC meeting and with yields having moved higher the market may potentially want to challenge the Fed on its view about yield-curve-control. The current lack of gold appetite was highlighted in the weekly COT report which saw the fund long drop to a one-year low. Silver received a boost in Asia after managing to hold steady against gold during Friday’s sell-off.

  • US Yield Curve Steepening 2-10 (STPU:xmil) - the US yield curve (2-10Y) is steepening aggressively sending important signals to the market like the steepening in 2007 leading into the financial crisis. One explanation for the steepening is higher growth and inflation expectations which short-term is good for banks but it also worsens financial conditions for companies that are still struggling to get access to capital in order to bridge their finances to the economic recovery. This is likely the cause why the FOMC has discussed yield curve control.

  • COPPERUSJUL20 (HG Copper) - has broken through key resistance at $2.50/lb and with hedge funds only just turning net-long, the current momentum and rebuilding of longs may see it challenge $2.60/lb. The virus’ impact on tightening supply, especially from key South American supplies, could be seen in China’s May trade data. Top producer Chile is increasing its supervision of mines to ensure they are complying with Covid-19 safety measures.

  • AstraZeneca (AZN:xlon) and Gilead Sciences (GILD:xnas) - the rumoured merger between the two drug companies will obviously put focus on the stocks in today’s trading. It seems AstraZeneca is the initiator so price action will most likely be most interesting in Gilead Sciences.

What is going on?

  • Global supply shocks could come back with vengeance as global shipping industry warns of labour shortages as sailors are stranded due to COVID-19. The industry has been running on emergency extensions of the labour rules with many sailors working beyond their contracts and regulatory limits. These emergency extensions end on 16 June and could create a logistics nightmare and bottlenecks in the global supply chain where up to 80% of the world’s trade volume is carried on vessels.

  • AstraZeneca and Gilead Sciences are talking to merge creating one of the largest deals in the global pharma industry. A potential merger between the two companies would create a $240bn giant in the drug industry. So far Gilead Sciences have indicated they are not interested in a deal changing the deal to a potential hostile takeover if AstraZeneca wants to continue.

  • US Bureau of Labor Statistics have acknowledged misclassifications in relation to the past months’ Nonfarm Payrolls which means that the supposedly drop in the US unemployment rate on Friday was due to a misclassification error and that the true unemployment rate most likely increased in May which would fit with the other high frequency data we have on the US economy.

What we are watching next?

  • Yield-curve control (YCC) was discussed at the April FOMC meeting and it could be implemented over the coming months. First potential test of any mentioning directly or indirectly of such a policy could be on Wednesday at the FOMC Meeting. In doing so the Federal Reserve could choose a rate, such as the 10-year Treasury yield, and committing to purchase as many securities as necessary to keep the rate under a set level. If implemented, gold could benefit as real yields would move further into negative territory once inflation picks up. This is the most important theme this week.

Economic Calendar Highlights (times GMT)

  • 06:00 – Germany April industrial production
  • 08:30 – Sentix Investor Confidence (June)
  • 12:15 – Canada Housing Starts (May)
  • 13:45 – ECB’s Lagarde in European Parliament hearing

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



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 (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.