Wednesday, March 29, 2023

Equities Hold Bid; Dollar Remains Weak


Nov. 18 Market Drivers

  • Markest edge higher
  • Dollar remains weak
  • -1.10% 0.26%
  • UST 10Y 0.86
  • Oil $41.88
  • Gold $1879/oz.
  • $8000/oz.

Asia and the EU


  • USD Housing Permits 8:30
  • CAD CPI 8:30

Markets saw a slight risk-on bid as the night progressed in early European trade with stock indices higher by about 20 basis points while the remained weak across the board.

There was no fresh newsflow as markets grappled with familiar themes of Brexit negotiations, rising COVID counts, and the need for more fiscal stimulus across the G-3 universe.

To that end, the prospects of stimulus dimmed a bit on both sides of the Atlantic as Hungary and Poland vetoed the proposed EU rescue package over contract language that demanded adherence to the rule of law while in the US the chance of a lame-duck session deal appeared to be nil with both parties now squarely focused on the runoff in Georgia.

Still, the markets remain confident that stimulus is coming at the start of next year and risk continue to hold bid as a result of that assumption.

On the economic front, the calendar remains quiet with just US housing data on the docket. Both and are expected to increase given the surge of demand for suburban real estate and low-interest rate prices.

Speaking of yields the has back off its rally towards the 100 basis point mark and is now trading at 83bp. Fixed-income traders remain far more skeptical about the prospect of a quick vaccine fix and resurgence of demand and that ironically is providing a bid for equities as yields remain supportive.

For now, the markets are happy to remain in a state of equilibrium as they await new policy moves from the Biden Administration and equities may be content to trade in a narrow range for rest of the day barring any exogenous shocks that could affect price.

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