Market Quick Take - October 15, 2020 Market Quick Take - October 15, 2020 Market Quick Take - October 15, 2020

Market Quick Take - October 15, 2020

John Hardy

Head of FX Strategy

Summary:  The US equity markets saw a fresh slide yesterday, and the last two sessions of declines, together with a slide in the futures overnight, have now wiped away all of the steep rally from Monday in the S&P500 index. Sentiment may be weakening on fading US stimulus hopes. Elsewhere, sterling traders are buffeted by Boris Johnson canceling his Brexit deadline and Aussie traders by RBA considering longer term asset purchases.

What is our trading focus?

  • Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - US equities saw a weak session yesterday and the selling continued overnight in the index futures. Very downbeat reaction to large bank earnings noted below were one concern, although technically, the major indices have room to consolidated further without reversing the recent rally wave after the steep rally from September lows. The next support areas come in around 3,410 for the S&P 500 and the more well defined 11,600 area in the Nasdaq 100.

  • USDJPY and other JPY crosses – the weak risk sentiment of the last few sessions and likely more significant, the drop in long safe haven bond yields has helped boost the JPY, with USDJPY having a look at the often pivotal 105.00 level yesterday without breaking it. The lack of JPY volatility has been notable for quite some time and a break below 105.00 that actually holds for a time (as opposed to the previous tests below, which quickly found support and failed to stay below for more than a week) could bring a reassessment of the yen.

  • GBPUSD and EURGBP crunch time is pushed back – but how far? - sterling jumped significantly yesterday after Boris Johnson announced that he would not pull out of Brexit talks today – suggesting that these are at least promising enough to offer some hope for an agreement in principle in the coming weeks. This sent GBPUSD back above 1.3000 and EURGBP to a new low daily close below 0.9050 - but traders may be reluctant to take sterling much higher until it sees a headline pointing to an amicable agreement – or the opposite. And the crunch phase for whether an agreement is possible may not arrive until later this month or in early November, according to both sides in the talks.

  • Brent Crude Oil (OILUKDEC20) and WTI Crude Oil (OILUSNOV20) - Oil poked higher again yesterday and the December Brent contract is near the range highs since September around 43.50 and the 200-day moving average is dropping into view not far above that level. The November WTI contract has a similar setup with its range high at 41.50 and has actually criss-crossed the 200-day moving average (now below 41.00) in recent sessions. The US API inventories in dropped over 5 million barrels last week, and the market will eye the latest weekly supply figures from the US DoE due later today.

What is going on?

  • Ugly action in big US banks after earnings reports - Goldman Sachs managed to avoid a significant sell-off yesterday, although it did post a modestly negative session despite the best earnings results in years on strong trading-driven revenue. But Bank of America and Wells Fargo both suffered ugly sell-offs yesterday of more than 5%, Bank of America as it failed to capitalize on the volatile trading environment to the degree its competitors did and its consumer unit saw a 17% decline from the year prior. Wells Fargo, like every other large US bank reporting so far, was able to set aside fewer funds than expected for loan losses than expected, but sold off on the announcement of a $1 billion charge to deal with a long standing customer abuse scandal and another $718 million restructuring chart. The bank’s revenue handily beat expectations, but the guidance was less optimistic on net interest income prospects in Q4 than, for example, Bank of America, which thinks it saw the bottom in Q3. At yesterday’s closing price, Wells Fargo is below its lowest weekly close since 2009.

  • Australia RBA Governor Lowe considering further easing measures – this was a surprise to the market, which took the Aussie and Australia’s bond yields sharply lower overnight, if modestly so. Governor Lowe said that the RBA’s board is discussing whether extending its purchase out the curve (currently the RBA has a 3-year yield-curve-control policy) would help the Australian labor market. Lowe commented that Australia’s 10-year yield is higher than “almost everywhere in the world”, although at some 0.84% before his comments (and 0.77% after), it is not far north of, for example, the US 10-year treasury yield of 0.71%.

  • France imposes a curfew to slow the Covid-19 resurgence - in the greater Paris area and several other major French cities that will not allow people out on the streets from late evening until morning, with further measures to follow if virus measures don’t improve in the next 10 days.

  • iTraxx Volatility for Investment Grade and High Yield corporates is rising again. European corporate bond volatility has dropped to levels seen at the beginning of March, however as Covid-19 cases continue to rise and winter approaches, volatility seems to start rising again.

  • The New York Fed has unveiled Treasury purchase scheduled for the second half of October. The NY Fed that is buying Treasury securities at a rate of $80bn a month, has released the schedule covering the end of the month. Out of the $40, almost half are being invested in the belly of the curve, with maturities up to 7 years. Around $4bn will go to Treasuries with maturity from 20 to 30 years.

What we are watching next?

  • US pre-election stimulus prospects are fading fast. US President Trump seems in full campaign mode and Republicans are in an uproar after Twitter and Facebook refuse to allow links to a NY Post hit piece on Biden. The Biden campaign called it a “Russian disinformation” attempt. With no deal on stimulus, at least 13 million US workers could face a complete lack of income with key elements of the prior stimulus deal set to expire on December 31.

  • US Q3 earnings season continues and picks up further next week. Another large bank – Morgan Stanley – reports today, while next week features market cap heavyweights like Tesla, Intel, Amazon, and Netflix.

Economic Calendar Highlights for today (times GMT)

  • 0730 – Sweden Aug. Unemployment Rate
  • 0950 – Hungary Rate Announcement
  • 1230 – US Oct. Empire Manufacturing
  • 1230 – US Weekly Initial- and Continuing Jobless Claims
  • 1230 – US Philadelphia Fed Survey
  • 1300 – UK Bank of England’s Cunliffe to Speak
  • 1430 – US Weekly Natural Gas Storage
  • 1430 – US DoE Crude Oil Inventories
  • 1500 – US Fed’s Quarles (FOMC Voter) to Speak
  • 1600 – ECB President Lagarde to Speak
  • 2100 – US Fed’s Kashkari (FOMC Voter) to Speak on Economic Outlook

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

Apple Sportify Soundcloud Stitcher

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 07

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
  • The rise of populism: Far-right parties will influence the future

    The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.

    Read article
  • Investing in China: Navigating Q1 amid economic challenges

    Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.

    Read article

The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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 (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.