Intraday Market Thoughts

VIX, USDX & Yields

by Adam Button
Dec 23, 2020 19:36

Another USD bounce proved short-lived and another pullback in stocks is swiftly reversed after US House of Rep Speaker Pelosi urged Republicans to join Democrats in meeting Trumps' last minute request to increase direct payments from $600 to $2000 per person.  Markets sustained a scare in early Asia Wednesday trade when Trump said he would not sign the $900 bn stimulus bill. GBP rallied across the board on reports of reaching an outline of a post-Brexit trade deal, while the finishing touches were being formed on fisheries. The charts below highlight major shifts already underway in USD and 10-yr bond yields, with crucial implications for next year.   EURUSD and XAUUSD remain well underpinned along the trendlines mentioned on Monday here. 

Click To Enlarge
VIX, USDX & Yields - Vix Usd Yields Dec 23 2020 (Chart 1)

It will be important to watch those fixing times for the remainder of the year. Christmas Eve, Christmas, New Years Eve and New Years all fall on weekdays this year so that leaves only four proper business days in the year, including today. Importantly, Monday, Dec 28 is the final day of the year for tax loss selling so we could see extra flows and volatility around that date.

Stock and bond markets in most markets will close early on Thursday for the Christmas holidays. 

Mixed in with that will be ongoing Brexit talks. The more-transmissible strain of covid also bears watching with the UK reporting a record number of new cases on Tuesday.

Economic data also continues to surprise. US consumer confidence from the Conference Board was at 88.6 in December, which badly missed the 97.0 consensus. The market largely shrugged it off because US stimulus (which passed Tuesday) will give a jolt to consumer spending.



Latest IMTs