Senior Relationship Manager
Summary: Risk Off on new corona variant, Black Friday with new meaning?
Good morning,
Equities are under pressure on the new corona variant that seems to be more infectious than other variants. Oil falls 3.5% and bonds rise. The UK limited travel to several destinations, China imposed new measures as did Japan. Given the way the market reacts, Black Friday may get a new meaning.
Equity futures are under pressure with the Dax giving up 1.9%, the Eurostoxx50 2.2% and US Indexes 1.25 (S&P 500 and Dow) and the Nasdaq 0.65%. US 10 Year yields gapped lower to 1.54, down 10 bps.
EURUSD remains stable at 1.1220 but GBP fell against the USD and the Euro to new 2021 lows on growth fears, trading below 1.33 and 0.8437 Gold is higher at 1800 and Silver torn between the industrial and the precious metal unmoved at 23.60. The Turkish Lira “stabilitzed” near the 12 figure.
Bitcoin remains at 57k despite news that India is looking to ban crypto currencies.
Other Headlines:
Bloomberg reports the highest inflow to Equity Funds this year, more than in the last 20 years combined
China is asking Uber competitor Didl to delist in the US
The Japanese Prime minister asks companies to raise rates by more than 3%, that seems not to support the transitory inflation theme.
Todays agenda is fairly empty and I believe the German Import prices will fade behind the new corona variant.
Please remember that US Exchanges will close early today due to the Thanksgiving Holiday in the US:
Trade safely
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach