Volatility continues to be elevated in the markets as COVID news dominates, causing sharp sell-offs and quick reversals.
Yesterday’s Powell presser surprised the markets as the Fed’s head sounded surprisingly hawkish, saying the Fed can quicken the pace of tapering so that it could end sooner. Stocks plunged, gold and silver cratered, and USD strengthened.
As usual, today’s trading saw a reversal of those moves as equities started the new day in a bullish mood and precious metals also tried to stage a comeback from the recent sell-off.
Powell’s testimony will continue today, possibly causing another round of volatility in the financial markets.
Additionally, the US manufacturing ISM for November is expected to improve marginally to 61.0 from 60.8 in October. The inflation subindex – prices paid – will likely stay near last month’s 85.7 (record highs).
Moreover, the Fed’s Beige Book will be released. The FOMC uses this analysis to help make its next decision on monetary policy. However, it usually has only a mild impact as the FOMC also receives two non-public books – the Green Book and the Blue Book – which are widely believed to be more influential to their rate decision.
Today’s sentiment was also boosted by Israeli Health Minister Nitzan Horowitz, who said that early data showed that those with three doses of the Pfizer Covid vaccine are well protected against the new omicron variant.
US yields rose sharply today, bringing the 10-year yield above 1.5% again. However, it looks like the yield will lose the 200-day moving average at 1.5%, possibly leading to a more significant drop in this yield.
The WTI oil will likely try to get back above the 200-day average as well. For this commodity, the critical average stands at 70 USD. At the time of writing, black gold was trading 2.5% stronger at 68.50 USD.