It’s been an unsurprisingly muted day in the markets as the U.S. celebrates Thanksgiving and the rest of us are left to watch most asset classes tread water for most of the session.
European stocks were on course to close marginally higher, which is encouraging in itself given the fear around inflation, interest rates and COVID at the moment. The latter caused a jolt in the markets last Friday but investors have gathered their composure once more. The risk of lockdowns and restrictions hasn’t passed, so it continues to weigh.
The U.S. posted some more strong economic data on Wednesday as it dumped a few days’ worth of releases on us in the space of an hour and a half, which was nice and easy to digest. Ultimately, the takeaway from the data was that the economy is looking strong, the labour market is in great shape and the consumer is ready to spend going into the important holiday season.
A number of Fed policy-makers will be comforted by the numbers we’ve seen recently on the back of a really strong third-quarter earnings season. At times over the last few months, it must have felt like the walls were closing in. Inflation was running hotter, lasting longer and yet the economy wasn’t necessarily ready for rate hikes. They may now feel much more relaxed and we could now see the consensus grow for faster tapering and earlier tightening than the bulk have allowed themselves to consider previously.
Even the lira has been relatively muted by recent standards. That may be something to do with the U.S. bank holiday, although it’s probably just finding its feet now that the dust has settled following Erdogan’s defiant speech that pulled the rug from under the remaining lira bulls. I’m sure there’s plenty of lira volatility to come in the days and weeks ahead but for now, it appears to be enjoying some reprieve.
A Bitcoin Santa Rally?
Bitcoin is enjoying some reprieve during the U.S. bank holiday. Of course, the tale we hear every year is that of families sitting around the table and buying Bitcoin on their phones following the thrilling annual crypto chat over turkey. It certainly makes for a nice story, but I’m sure it probably has more to do with the 20% decline we saw after hitting record highs a couple of weeks ago and consolidation we’ve seen the last couple of days. If the price breaks US$60,000 again, perhaps this year’s Santa rally will be led by Bitcoin.
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