Biden has markets Yellen

Investors in bullish mood ahead of Thanksgiving

The move from defensive to growth positioning accelerated overnight, stock markets and oil jumped, the dollar fell, and the US yield steepened. All classical signs that the world is pricing that the worst is over for 2020. The appointment of former Federal Reserve Chair Janet Yellen as Treasury Secretary under a Biden presidency was particularly well received by markets. Together with transition funding and vaccine progress, it made for a magical potion for financial markets desperate to look past the carnage of 2020.

The spiralling Covid-19 caseload in the United States is wholly ignored now for the global recovery story. Given the outperformance of the US PMI data this week in both services and manufacturing, I find it hard to argue. This evening, Initial jobless Claims, Personal Income and Durable Goods and the 2nd estimate for Q3 are released in the US. Having deteriorated last week, Initial Jobless Claims is probably the most important of the three. Sitting near the end of November, and with two months being a lifetime in 2020, the US GDP is old news and will be ignored entirely. Particularly if it doesn’t fit the narrative the market wants to hear. If Initial Claims fall, it will likely greenlight more bullish frenzy in the buy everything global recovery trade.

Asia’s data calendar is almost empty today, meaning that the global recovery story will drive investor sentiment in the region today. With the endgame rapidly approaching for the Trump re-election campaign, I have nagging fears that some geopolitical bombshells may still occur. However, any scorched earth attempts by the outgoing administration will likely only cause short-term spikes in volatility and won’t structurally change the recovery narrative financial markets have hitched their wagon to. Lest we not forget, monetary policy across the world will remain ultra-easy through all of 2021, and that will backstop asset prices nicely, even if economic and social inequality reaches new extremes by the end of it.

The rest of the week is likely to see muted activity as the US heads into its Thanksgiving holiday this evening. I would imagine many Americans will take Friday off as well and make a four day socially-distanced weekend of it. President Trump did the traditional pardoning of a turkey in the Rose Garden today ahead of the holiday. In the spirit of conspiracy theories, so prevalent in 2020, I for one, would like to see what name was actually written on the pardon.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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