Nasdaq leads equities slightly higher
Dollar weaker across the board
Nikkei 0.42% Dax -0.16%
UST 10Y 0.89
Asia and the EU
USD US Retail Sales 8:30
Equity markets were mixed while the dollar was lower across the board as a mild risk-off tone dominated markets in a generally quiet Asian and early European session.
There was little fresh news in overnight trade so Asian markets followed through on positive sentiment from the Moderna vaccine but the move was very modest as investors have clearly tempered their expectations regarding the rollout and broad acceptance of the product.
In the meantime, much of the OECD world is operating at limited capacity as many regions remain ravaged by the coronavirus and are in some forms of limited lockdowns. The Nasdaq which at this point has become a shorthand for the work-from-home lifestyle has resumed its leadership role and was up by 40 basis points.
Given the severe spread of COVID it will be interesting to see how the US consumer responds to constrained mobility. Today’s US Retail Sales data is expected to print at 0.5% vs. 1.9% – a significant slowdown from the month prior. However, the consumer has been surprisingly resilient and if the data proves better than forecast it would add to the bullish thesis that the US economy remains organically stronger than the consensus view.
If the consumer can prop up the US economy while the vaccine comes online and a new fiscal package is passed early next year, the market would have all the ingredients for a strong rally despite the challenges posed by the pandemic.
If however, the second wave shows that it is clearly taking its toll on mobility and consumer spending the markets could begin to correct sharply given little evidence of any immediate relief.