The relentless dollar rally continues to slam the Turkish lira, which has been printing fresh all time lows on a daily basis, and today has been no exception, tumbling over 1.8%, and pushing the USDTRY to an all time high above 3.50.
Following the worst month for risk-parity funds since 2015, we suspect month-end redemptions are driving both stocks and bonds (4x levered on average) lower out of the gate in November. Extending yesterday's losses, US Treasury yields are explding higher once again (long-end underperforming) following China's bond market's biggest yield spike in years overnight.
Less than two months after Ray Dalio warned about a potential wipe out in the bond market, he has been proven right: the November surge in global yields has resulted in the worst monthly loss in the Bloomberg Barclays Global Aggregate Total Return Index, which lost 4% in November, a record drop, and equivalent to $.17 trillion in losses. The index’s market value fell $2.8 trillion over past two months.
Following a November to remember, which saw tremendous market gains following the election of Donald Trump, December has started off on the back foot, with US equity futures lower, European stocks halting a two day advance ahead of the Italian referendum, US Treasury yields higher and the US dollar backing away from a 9 month high.
Industrial metals commodity prices plunged by the most since March in the last 2 days as China’s exchanges (once again) clamped down on speculation by tightening trading rules. As Bloomberg reports, for the second time this year, trading has exploded on the nation’s exchanges, pushing prices of everything from zinc to coal to multi-year highs and sending authorities scrambling to deflate the bubble before it bursts.
Barely having confirmed he will be Donald Trump's nominee for Treasury Secretary, Steven Mnuchin proceeded to roil the bond market when the former Goldman banker told CNBC he would look at extending the maturity of future Treasury issuance, hinting at 50 and 100 Year bonds, which promptly sent long-term US bond yields surging by the most since the turmoil following Trump’s election victory.
Following the news that Steve Mnuchin would be US Trasury Secretary, Wall Street analysts offered mixed predictions on which policies Donald Trump’s choice for Treasury secretary may pursue, as they have little to go on other than Mnuchin’s background with Goldman, buying/selling the former Indy Mac.
"Hope" will dominate through 1Q 2017 as S&P 500 climbs by 9% to 2400 according to a just released revised forecast by Goldman Sachs. The firm adds that "instead of our baseline adjusted EPS growth of 5% to $123, growth could accelerate to 11% and reach $130, which would support a P/E multiple above 18x." However, Goldman warns that "Fear" is likely to pervade during 2H and S&P 500 will end 2017 at 2300, roughly 5% above the current level.
Following yesterday's press reports that Steve Mnuchin and Wilbur Ross would be selected for two of the top economic posts in Donald Trump's administration, earlier today the two confirmed their nominations to lead the U.S. Treasury and Commerce Department, respectively. Mnuchin and Ross spoke on CNBC's "Squawk Box."
European, Asian stocks rise as do S&P futures as OPEC ministers gathering in Vienna appeared to be set to announce a deal to cut oil production and prop up global prices. Oil has surged over 7% as a result, also pushing US TSY yields and the dollar higher.