Good morning,

So we are having a new rise in risk off sentiment lately with US futures heavily down also today (Nasdaq -2.6%, Sp500 – 3.1%, DJ – 3.7%) after the sharp losses of last week: american equity indices lost around 5% weekly with the only exception of the tech-filled-up benchmark retreating a little lees (2.3%).

Cause has to be searched in the comeback of the Covid narrative, especially in the signs of a second wave that could derail the economies reopening: cases are to the upside in California and Florida, a new cluster has been signaled in Beijing over the weekend and India has become the fourth worst-hit country in the world with cases spiking to 320.000 despite an extended period of lockdown.

Mechanism in the markets is always the same:

  • RISKY considered ASSETS are sold —> we are seeing pressure in Oil, Aud, Nzd and Emerging Market currencies (Zar, Mxn, Try).
  • SAFE HAVENS are bought: Jpy, Chf and Bonds (we are talking about the US curve) all are catching a bid and USD is consequentially appreciating as well.
SP500, down -5.8% YTD

Tonight the Bank Of Japan will communicate its Interest Rates decision and its monetary outlook, on Thursday this week will be the turn of SNB (Switzerland) and BOE (UK).

Also worth of being followed is the appearance of Powell in front of the Congress during the second half of the week, where the chairman will report his semi-annual policy outlook.

Finally and as an anecdotal note, today CBOE is planning to reopen its trading floor that has been running electronic-only since March 16th.

Trade Safe

Marco Turatti
Market Analyst


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