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US Close – Impeachment Part Deux, Affirmed debut, Dollar strengthens as bonds rally

US stocks are modestly higher as investors await details of President-elect Biden’s multi-trillion-dollar stimulus package, further clues if some Fed members are becoming a little bit too optimistic, and ahead of preliminary late-stage trial results for J&J’s COVID vaccine, all while Democrats move forward with impeaching President Trump for the second time. With a deteriorating labor market, stocks will still be supported on expectations the Biden administration will quickly deliver a multi-trillion-dollar stimulus package.

Fed Speak

Risk appetite is also benefiting from more dovish Fed speak. Earlier in the week, Fed’s Barkin was excessively optimistic about the second half of the year and Fed’s Bostic triggered taper tantrum fears after noting that it was possible interest to raise rates in the second half of next year. The latest round of Fed chatter from Rosengren, Bullard, and Brainard, was filled with dovishness that erased some of the earlier tapering fears. Treasury yields hit their session lows after Fed’s Brainard noted that the bond-buying pace was appropriate and that it is need for ‘quite some time’.

J&J Vaccine

Wall Street is already starting to price in a successful result from J&J’s COVID vaccine. J&J could report their critical results anytime over the next couple of weeks. For risk appetite to remain intact, J&J’s single dose, easily stored coronavirus vaccine will need to have at least an 80% effective in preventing COVID-19. The J&J vaccine is based on research on adenovirus-based vaccines similar to AstraZeneca, but different than the mRNA vaccines from Moderna and Pfizer. A strong result from J&J will dramatically improve calls on when we will see a return to pre-pandemic life. In addition to only needing one dose, the J&J’s COVID vaccine would also provide great relief on logistics, since it can easily be refrigerated for months. J&J Chief Scientific officer told Bloomberg they expect a decision on their vaccine in March. At the JPMorgan health conference, Warp Speed Chief Slaoui stated he expects the J&J COVID vaccine to be 80-85% effective. Earlier Reuters reported J&J expects their COVID vaccine rollout to occur in March.


The House impeachment proceedings are expected to make President Trump become the first President to be impeached twice. The Democrats hold a majority in the House and with a handful of Republicans supporting the impeachment article, Trump will be impeached for inciting the Capitol attack. Senate Majority Leader McConnell rejected the soon-to-be Majority Leader Schumer’s request for an emergency session to start impeachment trial proceedings. That means the Senate won’t take this on until after inauguration day and that could disrupt a swift implementation of the Biden agenda. It is also unclear if the Democrats will get 17 Republican votes for the two-thirds majority to vote for a conviction. Impeachment part deux complicates how Biden gets his cabinet quickly approved and moves forward with his stimulus efforts. The first 100 days is critical for Biden’s success and right now it seems impeachment trial proceedings will make it utterly impossible to unite the country.

Affirm IPO

The Nasdaq outperformed following another strong IPO debut from Affirm Holdings, which became another multi-billion-dollar tech company. Affirm, an online payments company that offers point-of-sales loans, skyrocketed over 90% in what is another strong sign that IPO market will remain hot.


The dollar staged a comeback as Treasury yields slide for a second day following strong auctions. The 10-year Treasury yield was over 1.18% yesterday and has now plummeted to 1.08%. The dollar rebound was accelerating following some hawkish comments earlier in the week from Bostic and Barkin, but that has since been countered by Bullard and Brainard. Right now, the dollar will take it queue from Treasuries and it seem that January move got out of control. Wall Street knows the Fed will not tolerate the quick surge in yields we saw in the first two weeks of the year. The dollar may still rebound a little more as short positions continue to get covered.

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.

Ed Moya

Ed Moya [4]

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. 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. Most recently 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 and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya