Yesterday's brief hiccup in what has been an otherwise relentless rally in global risk assets is all but forgotten this morning, as European and Asian stocks, and US equity futures, all rise in quiet trading ahead of tomorrow's FOMC meeting, with the Dow set to make a 16th consecutive post-election all time high.
Quadruple witching weeks tend to be extremely volatile as large derivative positions are rolled over. Since 1990 the average weekly spread between the high and low for the S&P 500 during December quadruple witching weeks is 2.98%. Using Friday’s closing data, this would result in a potential range of 2326 on the high side and 2189 on the low side for the S&P 500 this week.
January has shown a tendency since the turn of the millennium to be an enormous “mean reversion” month — whether across assets or intra-asset (i.e. stock factor or sector performance). RBC's Charlie McElligott explains why.
In a quiet start to the week, European, and Asian stocks fell with S&P futures fractionally in the red, as Chinese markets tumbled the most since June and crude oil surged, even as the Nikkei erased all losses for 2016 on continued weakness in the Yen.
One of central banking’s most aggressive easers—the Bank of Japan—may soon have to think about tightening for the first time since 2007. According to the WSJ, "the latest buzz in Japanese monetary-policy circles is that the BOJ may have to lift the 10-year government-bond target from a recently set zero."
European and Asian shares rose again and S&P futures were little changed, as world stocks were set for a weekly gain and held near 16-month highs on Friday, while the euro steadied after swings following the European Central Bank’s decision to extend its stimulus program.
There’s seemingly no stopping the equity side of the “Trumpflation” trade in what may be developing into an epic year end blow-off top. The euphoria which took the S&P 500, Russell 2000 and the Transports to all-time highs yesterday, and the Dow to less than 500 points away from 20,000 carried over into Asian stocks (+0.8%) as they followed bullish trend, while European stocks rose for a fourth day.
The European Commission has fined Crédit Agricole, HSBC and JPMorgan Chase, a total of €485m for participating in a cartel concerning the pricing of interest rate derivatives denominated in euros. “The aim of the cartel was to distort” Euribor, said EU competition policy chief Vestager. The traders involved "tried to submit quotes to move the Euribor rate up or down."