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Indices Caught Between Surging Pandemic, Vaccine Breakthrough; USD Lower

By Ashraf LaidiStock MarketsNov 12, 2020 12:47AM ET

www.investing.com/analysis/game-changers--setters-200544369

By Ashraf Laidi | Nov 12, 2020 12:47AM ET

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by Adam Button

Indices are caught between the threat of surging cases (and deaths) prompting new lockdowns in the US (a risk-off event but positive for stay-at-home NASDAQ), and on the cusp of more vaccine breakthroughs (positive for indices and negative for stay-at-home NASDAQ).

After Wednesday's closing bell, Moderna (NASDAQ:MRNA) said its vaccine trial got enough infections to allow for a preliminary analysis of the vaccine effectiveness to begin broader analysis.

Is OIL showing a gravestone doji daily candle? Does GOLD show vulnerability at the 1850 support? Will VIX bounce off the right-shoulder support from 23.40s? Below is a sample of Wednesday's trades to the WhatsApp Broadcast Group

Whatsapp Broadcast

Bonds and Indices

We continue to watch 1.00% in the US 10-year yield and how market behaves if/when it breaks. Will a breakout be a reflection of outright risk-on surge and optimism to the extent of boosting the reflation trade (USD-negative), or would it pose a threat to the increasingly low-rates dependent players and the borrowing-addicted US government until it whispsaws lower?

Outside of that, the mode in markets continues to be selling the US dollar even with Treasury yields rising. There is a mountain of money parked in the US bond market that's waiting for the right time to dip into foreign investments, particularly emerging markets. News of a vaccine that could potentially eradicate the virus may be that trigger but it's competing with rising cases in the interim.

GBP and Brexit

Just 24 hours ago it seemed like crunch time in Brexit talks as EU and UK announced a rapprochement in negotiations, prompting GBP spikes across the board, which was furthered by the vaccine news—a development considered by FX to be widely positive for global growth ie negative for USD and JPY against the rest. As cable hit the 1.3290s, we were reminded that the pair never dipped below 1.40 for decades before Brexit.

At present, the contours of the new deal don't appear to be onerous and combined with Sunak's willingness to spend, leave the UK in a solid position once Brexit and the pandemic are sorted.

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1D1W1M6M1Y5YMax

US 30	34,017.8	-52.6	-0.15%
US 500	4,329.2	-0.8	-0.02%
Dow Jones	34,014.65	-55.77	-0.16%
S&P 500	4,328.94	-1.06	-0.02%
Nasdaq	13,244.06	+20.08	+0.15%
S&P 500 VIX	16.85	-0.69	-3.93%
Dollar Index	105.285	+0.241	+0.23%

Crude Oil WTI	90.36	+0.73	+0.81%
Brent Oil	93.61	+0.31	+0.33%
Natural Gas	2.643	+0.033	+1.26%
Gold	1,944.95	+5.35	+0.28%
Silver	23.823	+0.136	+0.57%
Copper	3.6950	-0.0010	-0.03%
US Soybeans	1,295.25	+1.25	+0.10%

U.S. 10Y	4.438	-0.044	-0.99%
U.S. 30Y	4.523	-0.029	-0.63%
U.S. 5Y	4.567	-0.049	-1.05%
U.S. 3M	5.482	-0.002	-0.04%
US 10Y T-Note	108.72	+0.30	+0.27%
Euro Bund	129.59	-0.01	-0.01%
10-2 Yield Spread	-77.46	-4.50	6.17%

Apple	175.09	+1.16	+0.67%
Alphabet A	130.73	+0.29	+0.22%
Tesla	246.23	-9.47	-3.70%
Amazon.com	129.42	+0.09	+0.07%
Netflix	380.59	-3.56	-0.93%
Meta Platforms	300.44	+4.71	+1.59%
Bank of America	27.67	-0.38	-1.35%

	Interest Rates	Next Meeting
FED	5.50%	Sep 20, 2023
ECB	4.50%	Oct 26, 2023
BOE	5.25%	Sep 21, 2023
SNB	1.75%	Dec 14, 2023
RBA	4.10%	Oct 03, 2023
BOC	5.00%	Oct 25, 2023
RBNZ	5.50%	Oct 04, 2023
BOJ	-0.10%	Sep 22, 2023
CBR	13.00%	Oct 27, 2023
RBI	6.50%	Oct 06, 2023
PBOC	3.45%
BCB	12.75%	Sep 20, 2023

Indices Caught Between Surging Pandemic, Vaccine Breakthrough; USD Lower

Bonds and Indices

GBP and Brexit

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