US Open – Safe-havens (Big-tech, yen, franc, Gold, Treasuries) roar, Oil top in place

The stock market hot streak is over.  After numerous hedge funds threw in the towel scrutinizing this historic stock market rebound, it seems now the financial markets are ready to focus on the economic recovery and when the Fed will contemplate the curtailment of the COVID-19 emergency programs. 

Global equities are softening as investors are using several geopolitical risks as their excuse to succumb to profit-taking.  Rising tensions between North Korea and South Korea, risks of losing a free and open IndoPacific (Taiwan/China), and the never-ending saga that is US-Chinese relations will keep investors  on their toes over the coming months. 

US stocks pared losses as investors piled back into safe-haven technology stocks.  The morning rebound is nothing to brag about and still reflects a concerning outlook for reopening stocks. 

Fading risk sentiment sent the Japanese yen, Swiss franc, and Treasuries higher.  Investors kept a close eye with the 10-year Treasury yield as it was getting very close to 1% at end of last week.  The Fed wants a low interest rate environment and yields will likely be kept in check. 


This should be an easy FOMC decision, as the Fed is in holding pattern waiting to see how the economic recovery unfolds.  Investors will grow nervous now that the Fed transferred the US economy from the ICU to a rehabilitation facility.  Powell will likely welcome the shockingly better-than-expected nonfarm payroll report but highlight that recovery will take longer and remains vulnerable to several risks to the outlook.  Policymaker watchers will want for further hints about adopting yield curve control. 


Oil prices are playing “tug of war” between improving crude demand prospects and deteriorating supply-side fundamentals.  WTI crude will likely struggle recapturing the $40 level again unless a surprise production disruption occurs.  Oil producing nations are eagerly anxious to ramp up production that might not match the slow pickup energy markets are seeing with the demand side. 


Gold’s best friend, risk aversion is back.  Gold is about to breakout even higher after the stock market rally ran into a brick wall after it added $21 trillion to global equities.  The valuations in equities make no sense and investors are skeptical that risky assets have reached the end of their rally.  Hertz has erased all their post-bankruptcy losses, while Macy’s has recovered the majority of losses following their recent liquidity concerns and batter consumer due to the coronavirus pandemic. 

Overstated confidence with the stock market rally has many 12-month targets already reached (indexes and individual companies) and investors that got in on the rally seem ready to head for the sidelines and wait for a pullback.  A plethora of risks to the outlook should help keep gold prices climbing higher in the short-term.  Gold should climb its way toward $1800 on Presidential election uncertainty, Far East political strains, and as coronavirus pandemic appears to be worsening.   

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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, 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.