A Deal By Week-End?

Stock markets are back in the green again on Wednesday, enjoying a bumper start to the week, as lawmakers in the US talk up the prospects of another relief package.

The deal-making process has typically been drawn out but it’s really dragging on now and has become a major concern at such a fragile time for the US economy. Lawmakers appear encouraged by the progress of the last couple of days, with Treasury Secretary Steve Mnuchin talking up the prospects of a deal by the end of the week.

As is so often the case, it seems every major headline right now has the US at the centre of it and, as far as the markets are concerned right now, that couldn’t be more true. US real rates continue to slide deeper into negative territory with the yield on the five year hitting new record lows on an almost daily basis.


Gold surges through $10,000

This is taking its toll on the dollar, which rebounded late last week but has been in decline again this. The movements in the greenback have been a key driver for instruments across the board, the latest and most notable coming in gold overnight as it breached $2,000 for the first time with relative ease.

With US yields now so low, gold may well find itself back in safe haven territory once again. And given the sheer amount of stimulus we’ve seen this year – both monetary and fiscal – the heightened geopolitical tensions and the current path of travel for the dollar, there may well be plenty of upside room for gold.

EIA expectations rise as oil tests range

There’s no escaping the benefits of a weaker dollar in the commodity space and oil is certainly basking in its decline. Crude has been range bound for a couple of months now but it’s really testing the upper end of that today, breaking through $42 before running into a little resistance around $43.

The move was aided by a huge drop in inventories on Tuesday. With EIA only previously expected to report a three million barrel drawdown and API reporting more than eight and a half, it seems there’s plenty of room for upside surprise that could further support crude prices today.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.