Global Equity Markets Mostly Higher
STOCK INDEX FUTURES
Global equity markets were mostly higher overnight with the exceptions seen in Shanghai where both markets declined by just under 0.5%. Obviously, the bias has turned to the upside after yesterday’s latest vaccine progress news but also because the highest close in 4 sessions and a fresh higher high this morning. In retrospect, seeing favorable vaccine news at the beginning of the week over the past 3 weeks, the likely appointment of a very dovish Treasury Secretary, a noted pickup in TSA security screenings last weekend and preholiday optimism likely ahead that gives the bull camp control again today. Earnings announcements will include Medtronic, Analog Devices, Hormel Foods and J.M. Smucker before the Wall Street opening while VMware, Autodesk and Dell Technologies report after the close. The trend is your friend by a setback off today’s US scheduled data and hope for a preholiday euphoria rally.
We are surprised that the dollar is holding above the recent consolidation lows given what appears to be a “progressing” risk on tide. However, it is possible that some dollar flight to quality longs are holding in place off the idea that widespread US regional lockdowns could still upset the markets. On the other hand, the flight to quality dollar bulls appear to be the odd man out given action in other financial markets! While we expect soft US scheduled data later this morning and we expect the dollar to rally off that news, we suggest traders look to a rally in the dollar to get short for a downside breakout in the coming sessions.
The fundamental and technical trends are down with the bond and note markets likely measuring downside action against the lingering potential for serious infection problems. On the other hand, the markets have been well-aware of the record infection pace for nearly 2 weeks, anxiety is moderated by the idea that “eventually” the virus will be put down. However, from a short-term trading perspective it is possible that today’s US scheduled data will provide a modest bounce, which should be viewed as a selling opportunity. We would anticipate a bounce in December bonds up to 173-21 and up to 138-16 in December notes before prices reverse.
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