Daily Comments

A renewed rise in coronavirus fears weighed on markets, especially in sectors such as travel. Asian markets are lower. The Shanghai Composite fell -1.29% while the Nikkei 225 remained closed for a holiday. A new set of restrictions related to the coronavirus in the UK were not as harsh as had been feared. The DAX gained +0.41%. 10-yr Bunds yield -0.51%. August Existing Home Sales increased by +2.4%, to an annual rate of 6M, vs. consensus of 5.965M. The Richmond Fed Mfg. Index for Sep. printed at 21 vs. expectations of 12. 10-Year Notes yield 0.671%. The Dec. US$ Index was up +0.32% to 93.980. Dec. gold edged lower by -0.19% to $1,906.90. Dec. crude gained +0.63% to $40.10. After a Tweet late yesterday from Elon Musk about “battery day”, today Tesla took a dive. Covid-19 related travel/lockdown restrictions are tightening a bit in Europe. Fed. Chairman Powell told Congress that the Main St. Lending program should remain as-is, and Treasury Sec. Mnuchin said “there’s not more we can do.” The ES was relatively quiet overnight. It then rallied near the open, soon fell, but gained again to close strong.

Hong Kong shares tumbled as two major banks were accused in media reports of moving large amounts of suspicious funds. Asian markets were lower. The Shanghai Composite gave back -0.63% while the Nikkei 225 was closed for a holiday. European banks were also named in the suspicious activity reports. That added to a malaise sparked by fears of rising coronavirus cases. European markets were down hard. The DAX lost -4.37%. 10-yr Bunds yield -0.52%. The Chicago Fed’s national activity index slid to 0.79, and the 3-mo moving avg. has gone from 4.23 in July to 3.05. 10-Year Notes yield 0.671%. The Dec. US$ Index surged by +0.68% to 93.585. Dec. gold plunged by -2.27% to $1,917.60. Dec. crude also sank, losing -3.41% to $40.19. U.S. stock prices traded in wild fashion overnight, first trading higher early on, but European shares weakened and dragged the ES lower. The major indexes sold off hard in the day, posting their worst decline since April. Perhaps the market is anticipating a highly contentious battle over the now vacant SCOTUS seat? The ES hit session lows early, but late in the day pared half the losses. The NQ losses were all recovered.

The Chinese yuan continued its significant improvement against the US$. Asian markets were mostly higher. The Nikkei 225 rose +0.18% and the Shanghai Composite jumped +2.07%. Cases of Covid-19 are rising again in Europe, threatening the recovery. European markets were negative. The DAX slid -0.7%. 10-yr Bunds yield -0.487%. The Q2 Current Account deficit widened to -$170.5B. For August the leading economic index gained +1.2%. Final September U. of Michigan Consumer Sentiment printed at 78.9 from an Aug. level of 74.1, beating expectations for a 75.0 print, and the best result since March. Current conditions gained +4.6 to 87.5, and expectations hit a 6-month high, up +4.8 to 73.3. Baker-Hughes said the U.S oil rig count for 09/11 is 255, up 1. 10-Year Notes yield 0.695%. The Dec. US$ Index was up +0.03% to 92.995. Dec. gold gained +0.41% to $1,957.80. Oct. crude slid -0.27% to $40.86. ES futures were mostly flat ahead of the open. Today was quadruple witching day, with options/futures contracts expiring. Stocks dropped to session lows as Speaker Pelosi said she’s not budging from her $2.2T Stimulus price, but prices pared some losses by the close.