Markets:
- Gold down $84 to $2660
- US 10-year yields up 15.5 bps to 4.44%
- WTI crude oil flat at $71.96
- S&P 500 up 2.5%
- Russell 2000 up 5.8%
- Nasdaq up 2.9%
- USD leads, JPY lags
Big congrats to those who put on Trump trades, particularly ones that bet on a red sweep as it became clearer through the day that Republicans would have a slight majority in the House.
In terms of market moves, they basically unfolded as predicted with the Trump win: Stronger USD, higher Treasury yields, stocks up, bitcoin up. To be honest, it’s a relatively rare political event where the market handicapped it right.
And the moves were big, with the euro falling 200 pips and USD/JPY gaining 300 pips. China ETFs fell about 2.6% and that’s a very strong indication that the market doesn’t see the promised 60% tariffs coming. It’s also an indication that the market thinks Beijing will unveil stimulus larger than the 10 trillion yuan touted on Friday or Saturday.
Bonds got some slight relief in today’s Treasury auction as demand was better than the market expected. That reeled in the yield rise to 16 bps from 24 bps at the extreme. There’s a big debate about how much of a rate rise that stocks can withstand but for now, not even home builder stocks seem to be bothered.
One loser was gold as it was hit by the combination of higher rates, a stronger US dollar and relieved fears of a contested election. Given all that, the $82 decline makes sense.