Mid-Market Update: Trump needs to deliver more stimulus, Election uncertainty eases, Treasury yields surge, Dollar declines, Oil surges and Gold’s bullish outlook

Many attribute this mornings’ strong stock market rally to optimism regarding President Trump’s health and a last-ditch attempt to get another round pandemic aid before the presidential election, but that might not be entirely the case.  Recent weakness with US stocks stemmed from rising fears that the results from the November 3rd presidential election might take weeks and that the final outcome would be contested.  The latest NBC News/Wall Street Journal poll showed 53% support former-VP Biden nationally, while only 39% were for President Trump.  Biden’s lead has gone from 8 points to a huge 14 points in just a month.  The poll did not reflect the news of Trump’s coronavirus diagnosis, but that is not expected to help him much. 

Trump has lots of ground to make up over the next month and he may capitulate to the Democrats terms for the next fiscal stimulus package.  At this point, Trump needs to do everything possible to win votes and a fresh stimulus deal might be his next move.    

Trump’s Treatment

President Trump’s doctors have prescribed a plethora of drugs, with the focus falling heavily on dexamethasone, Regeneron’s antibody drug, and Gilead’s remdesivir.  Trump is taking the steroid dexamethasone, which is normally given to patients in the second phase of the disease.  This could imply that President Trump is at high risk of having some kind of inflammatory response. Regeneron’s experimental antibody cocktail, which boosts the immune system by limiting virus ability to escape and hopefully neutralizing it. The president is also taking Gilead’s remdesivir, an antiviral drug that has shown signs of reducing the number of days for recovery time.  Remdesivir is used by many patients that are on supplemental oxygenation. 

President Trump’s condition improved over the weekend and optimism should remain high that he will bounce back strongly.  Trump will try to use his hospitalization as a turning point for his understanding of COVID-19, but it seems unlikely he will be able to chip away at Biden’s massive lead. 

Treasury Yields Surge/ Dollar Slide Resumes

The phase 4 fiscal stimulus train is coming. I’d still be surprised if it happened before the election, but there should be no doubt that it will happen shortly afterwards.  Former-VP Biden has a commanding lead against President Trump and the base case scenario for the election should be for a unified Congress.  Treasury yields are surging as US new cases have flattened and as traders jumped back into risky assets.  The dollar depreciation trade is back.  Chicago Fed President Charles Evans reminded markets today that officials will probably have to wait for years to see the inflation rate rise above their 2% target.  The Fed will be the last one to tighten policy and that spells trouble long-term for the dollar. 

ISM Services

The ISM Services Index strong reading was today’s big economic release of the day.  September economic activity in the services sector improved for a fourth month in a row at 57.8, better than the consensus estimate of 56.2.  It was a surprising good release as most of the battered industries, such as arts, entertainment & recreation, accommodation & food services, and retail trade, all reported growth.  When discussing the outlook, respondents were rather pessimistic.  The outlook was easily described as bleak and uncertain.  Regarding employment, the ISM reported growth in hiring after six months of contraction.   


Crude prices steadily rose higher alongside surging equities as an improving President Trump would raise the chances that a fiscal stimulus deal will get done before the election.  Oil is following the broader market right now.  These gains on stimulus prospects could easily go up in smoke. 

An unexpected decline in non-OPEC production also provided energy traders with further reasons to drive oil prices higher.  Norwegian offshore oil and gas fields saw production slide by 8% as workers strike over pay.  Still at risk is Equinor’s Johan Sverdrup field, the largest in the North Sea, so the disruption in production could significantly grow. 

Libya continues to ramp production, but the impact is somewhat limited for now as the initial shock was priced in last week. 


Gold prices are rising after the dollar resumed its slide as the prospects for more fiscal stimulus improve.  Gold initially overnight sold off after concerns over President Trump eased and that he may be released from hospital on Monday.  Gold saw a short-lived safe-haven unwind as investors realized that the President was likely going to push hard for another stimulus deal before the election.  The president is trailing terribly in the polls and he will want to make Americans feel better about their situation before they cast their ballots. 

Gold will have no shortfall of stimulus in the coming months.  Gold will get a couple trillion dollars of US stimulus in the next month or by February at the latest.  A massive infrastructure Biden plan is good for a few trillion dollars by the first half of the year.  The ECB is likely to boost their pandemic bond-buying program by a half a trillion dollars before the holidays.  Too much stimulus is upon financial markets and gold is going to be one of the best beneficiaries.  

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.