Gold is starting to light up again after a spike in volatility. All the bullish reasons to belong to gold in the medium term still apply - notably, the incomprehensible amount of money being printed by central banks and fiscal spending by governments to offset the impact of the coronavirus outbreak.
Oil prices bounced after Iran says OPEC+ may need "other measures" to support oil according to Bloomberg. Specifically mentioned are those producers who haven't made any commitment, such as shale producers in the US and Canada. While Iran will not have any sway over the Texas Railroad Commission and certainly not the White House administration, it does bring light to possible intervention. And an expanded OPEC++ might move the needle, at least enough to stem the saturating tide while demand stabilizes and recovers.
But importantly. United States Oil (NYSE:USO) had to make further changes to its holdings again yesterday and will now hold 40% of its portfolio in June expiry futures, 55% in July, and 5% in August. As open interest drops in June so does delivery and settlement risk which should underpin oil markets over the short term as this could trigger more short covering as open interest falls.
In stocks, yesterday's risk-off theme didn't continue into the Asian session. Despite the S&P 500 finishing the day down, 3.07% Asian equity markets were relatively calm. The Nikkei was down just 0.74% while Chinese markets ended the day in positive territory after mainland regulators painted the tape green with more promise of more stimulus.
The ECB source's story certainly helped to bring a halt to the risk-off moves, and it indeed accounts for the early weakness in fixed income in the European session. It has been reported that the ECB will hold a call tonight, which will discuss whether collateral requirements can be lowered to include junk-rated debt. That would go some way to relieving investors' concerns