Asian investors like what they see from an all-in Fed which is being viewed in a very impressive light for both Main and Wall Street even as the U.S. Congress dithers. But once a Coivid-19 aid deal is signed, it will be perceived as the icing on the cake
Still, Asian equities and fixed income certainly like what they see from the Federal Reserve. No one likes the positive correlation between the two when markets are going down, but if they are going up in unison, then it's most welcomed.
U.S Dollars Starts To Weaken
The USD started to weaken at the Asia open, which is a huge key, as regional equity futures breathed a sigh of relief and turned positive. The cross-currency basis swaps, high-yield credit spreads, US rates volatility, and the VIX curve are all easing but remain the critical markers for a further dollar declines beyond the realm of short-covering we are seeing out of the gates today.
The positive open in APAC suggests, high-beta currencies to US equities can outperform (i.e., KRW).
A softer USD would also offer upside for basket currencies, including the SGD -CNH and JPY, which will see demand as they are countries that have taken more proactive containment measures and will see the virus pass quicker. Also, congress passing a revised agreement before the weekend would accelerate USD selling, where the hard-hit AUD and EUR also stand to benefit big time.
Physical Gold Scarce
Precious metal Exchange for Physical (EFPs) has blown out. Gold went from 2.00 mid yesterday to 10.00 paid and was paid at 14 this morning. Indicating there is a massive shortage of gold for delivery. There is just not enough around to support the underlying promissory notes (paper gold). Indeed, this a rarity for the ordinarily liquid yellow precious metal. Silver EFP was also up from 1.5 mid yesterday to 2/5.
It's a godsend for bullion investors.
This demand for physical is coming on the heels of three of the world's largest refineries in Switzerland are closing due to the Covid 19 spread in Europe.