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Record US Coronavirus cases

TAKEAWAYS


•    Last full trading week before the US election
•    EUR/USD – highest weekly close in 7 weeks (1.186)
•    US reports new record highest day of COVID infections
•    Wall Street  closed lower last week
•    Hang Seng (HK-Shares) highest since Sept 3
•    DAY AHEAD: Germany IFO, US New Homes Sales, Twilio earnings
 

GURU WISDOM


“The world doesn’t pay you for what you know; it pays for what you do.” – Jack Canfield


MARKETS


The US dollar fell amid the election uncertainty last week. On Friday the euro had inched higher to reach a 7-week high after Eurozone PMI figures fell less than expected and European earnings were well-received. 


Cryptocurrencies turned lower on Friday after a breakout week that took Bitcoin to $13,000. The second tier cryptos rose too with the price of Ethereum and Bitcoin Cash closing in on a 2-month high.


Stocks in Asia were mixed early on Monday with Shanghai turning lower while the Hang Seng hit a 7-week high. This week Chinese leaders meet to set out a new 5-year plan for the country for the 14th time. 


Wall Street closed lower last week, snapping a 3-week in streak as traders sold stocks over the diminishing chances of a US fiscal stimulus package. This week the big 5 FAAMG stocks report earnings and there is a first reading on third quarter US GDP.


Gold and silver are soft again in early trading on Tuesday following a bearish weekly reversal that saw prices end little changed on the week. Oil prices have fallen in early trading on Tuesday following a weekly drop. Brent crude fell to a 3-week low just under $41 per barrel.

 


Record US cases


The US reported 83,000 new virus cases on both Friday and Saturday, surpassing the previous daily record of 77,000. Case numbers are shooting higher across the West as the season changes to colder weather and people gather more inside. COVID deaths in the United States have remained relatively flat, perhaps explaining the more muted reaction in markets. However, health officials warn that deaths tend to lag cases by 2 weeks. 


Bond yields


Rising belief that a US stimulus package will be passed sooner rather than later means investors are pricing in higher government borrowing at higher interest rates. US 10 year bond yields hit a 4-month high last week while the spread between the yields on 5-year and 30-year bonds widened to the most in 4-years, signalling an economic recovery. When the economy is doing well under normal circumstances investors expect to be paid higher rates of interest on longer term investments.
 

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