The massive November rally settled, after gains of nearly 13% in the Dow. Profit taking was the flavor of the day, after a massive rally spurred by post-election market sentiment and vaccine news. The cases of coronavirus continue to surge, but the imminent distribution of the vaccine, seems to have allayed market fears. US Weekly Jobless Claims rose more than was expected and University of Michigan economic sentiment came off highs, but market liquidity is overwhelming caution . The US Dollar continued to lose ground, with the EUR breaking above 1.1900, while the GBP hit 1.3380.
US markets have been experiencing a huge relief rally and liquidity ensures the veracity of the gains. The questions will come, when the market analyses what the Biden administration is likely to impose, on the policy front. The manifesto promises huge tax increases, spending and debt. That is not a recipe for unparalleled market confidence? The trade exposed commodity currencies were again beneficiaries of the flagging reserve, with the NZD surging back above 0.7000, while the AUD pushed up to 0.7350.
Asset bubbles are building along with unprecedented global deficits and debt.