Markets today

Everyone is focussed on the presidential election. It’s an extremely ugly slow-motion car crash. It seems unbelievable that any good will come of it, but somehow within a week or so at max (surely?) we’ll know the result. The markets seem to have risk off fatigue and are rallying. I’ve no idea for how long, but maybe they think that Trump will just about make it.

Bonds are really all over the shop. The 30 year US T bond future is up 0.18% (i.e. yield down 1.6bp). The yield hasn’t gone anywhere since early March, and is basically where it was when it spiked down in response to the beginning of the pandemic panic. Given that the pandemic is now having more of an impact on global capacity than it was then, we are either going to have another colossal burst of QE ∞ or else the lockdown is going to magically have no impact on the real economy.

DX was flat, and as a consequence commodities and miners rallied. CL1 went up 3.3%. Nat. gas went down, by 3.6%. Kuppy reckons that NG is a byproduct of oil, so I guess it’s natural that the prices of these two commodities would move in opposition. Unicorn bay says their correlation is 0.28, so not exactly uncorrelated, but not so much as most commodities.