One gets the distinct impression that traders will be happy when this week is over – and it is, for folks in Asia.
Volumes were low, generally speaking, and with US equities (the global risk asset bellwether) having posted absurd gains Tuesday-Thursday, Friday seems annoyingly redundant right now. Anything could go wrong, but not much else could go right.
“The sentiment among traders seems to be that things went a whole lot better than we might have expected and we’ve had enough”, former trader Richard Breslow wrote, for Bloomberg. “We’d just as soon it could be over”.
“The new ‘bull’ market headlines about assets that bounce 20% after a precipitous decline are always comical”, JonesTrading’s Mike O’Rourke chided. “In the dynamic world of data in which we live, it is probably time to retire simplistic antiquated definitions of phenomena such as bull/bear markets and recessions”, he added.
Spain had its deadliest day yet in the coronavirus epidemic and the US surpassed China in total infections, a dubious milestone that Trump says is a testament to America’s rigorous testing regime and underreporting from Xi.
The RBI cut rates and rolled out $50 billion in liquidity in a bid to cushion the economy amid a nationwide lockdown affecting 1.3 billion people. The rate cut was probably necessary but it’s yet another example of EMs making themselves less attractive in terms of carry at a time when the appetite for risk-taking isn’t there.
Thankfully, the dollar is on track for its worst week since 2009. The greenback’s slide has played a big role in bolstering risk sentiment this week.
“Funding cost pressures continue to noticeably abate”, Breslow remarked. “Yen basis swaps have come in nicely this week and swap lines have made dollar sourcing much less of a problem”.
The bottom pane speaks again to how truly rapid and vicious this bear has really been.
Whether this week’s good vibes will last is obviously debatable. The US House will likely pass the stimulus package on Friday, which is good news, but it’s priced in. This promises to be a rough weekend for the US on the COVID-19 front.
And, in a testament to the fact that nobody is immune, Boris Johnson has tested positive for the virus.
This virus has a dark, marvellous sense of humour.
Yep any minute now just as I would tell my kids that it is just around the corner. Little bastards grew up and now tell me that they will see me soon well guess what?