Uncertainty Ruling Markets - Election, Rate Hike Eyes, Oil PlummetsTuesday November 01, 2016 17:17
A slightly stronger dollar, recovering from the shock of a new probe of Hillary Clinton’s email faux pas, only nicked gold slightly, which late in the day was buoyed in regular trading. Gold is up about $3.50 per ounce. Silver fared better, shrugging off dollar the small bit of strength and rising 14 cents per ounce or 0.75%.Equities seemed listless and without direction, investors expressing their displeasure over the turmoil in the campaign and, even though it is highly unlikely, showing some concern about the FOMC’s meeting this week. The horse-race handicappers are still pretty much set, however, on an interest rate rise in mid-December.
On that sentiment, the three major indexes are unchanged. Asia was about in the same predicament as the U.S. but Europe took the uncertainty much harder. The DAX was off about 0.25%, FTSE down 0.60% and the French CAC was off 0.85%.
In the bond department, face prices rose for a while today and then started zigging and zagging, dragging yields in the reciprocal direction. The benchmark 10-year bond yield touch 1.85% three times in the course of today’s trading, dropping back each time as low as 1.83% where it will settle.
Of course, investors and traders are eyeing the Fed just as the rest of us are.
Crude oil took a lot of the sparkle out of the equities today, too. (Equities performed fairly decently given all the headwinds they faced.)
West Texas Intermediate dropped precipitously by 4.15%. Brent North Sea, the rest of the world’s benchmark, fell 2.80%. That brought the WTI price per barrel well under $47 while the ppb for Brent is staring $48 in square in the face.
OPEC’s super deal among members and large-non-member producers like Russia seems to have fallen apart for the nonce. It should be noted that there is a full month for the various players to gather their forces before the formal meeting in Vienna on November 30th.
Our feeling is that there will be some kind of action that will fall into the column of face-saving but it will not have a great impact on prices. But, indeed, it will be a table-setter that will encourage the market manipulators to extend their controls.
As we have said countless times, though, prices rising into the mid to upper-$50 per barrel range will entice North American producers to increase output and thus push prices right back down.
OPEC and its outside posse have painted themselves into quite the corner.
For those who would like a deeper analysis, I invite you to try our daily video newsletter. Simply use the link at the bottom of this report to sign up for a free trial.
Wishing you as always, good trading,