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End of week optimism on vaccine & US stimulus package – Market Overview – November 13

End of week optimism on vaccine & US stimulus package – Market Overview – November 13

Equity markets have resumed their upward trend with gains that have approached 1%, mainly in the European indices that have welcomed the announcement of Pfizer vaccine advances.

In the United States, although the market already takes Biden's victory for granted, Trump's lack of recognition of his electoral defeat continues to the point that he has withdrawn from the talks about the approval of the fiscal stimulus package. It brings worries over investors and that if it continues like this, it will mean a considerable delay in a necessary measure that both investors and the Federal Reserve itself are expecting to sustain the American economy.

The market was optimistic in this regard, at least at the time of writing this overview. The leading North American indices remained in the high zone after the rally that began at the beginning of the month.

Pandemic, V2

Another element of concern is the increase in the number of people infected by the pandemic.

In the United States, the number of people infected daily reaches 150,000, and experts project that they will reach 200,000 in the coming days. Everyone anticipates that the arrival of the vaccine will not mean the immediate end of the pandemic. It takes time to reduce the cases of infected, and that social distancing measures must continue to be maintained, something that will undoubtedly continue to harm the economy, as the presidents of the world's leading central banks stated yesterday in a joint virtual meeting.

Therefore, uncertainty could continue. However, its level has indeed decreased in recent weeks both due to the Democratic victory in the American elections and the imminent arrival of a vaccine.

This decrease in uncertainty is reflected in the market through the evolution of sovereign bonds and the Dollar's behavior.

Tnote,10-year American bond, remains stable after the massive sale in the last four days, which led it to exceed the 0.90% zone in yields. The bond approached the 137.30 support zone, where there is a price consolidation at this level.

It will be challenging to drill down this zone with the Federal Reserve maintaining its QE asset purchase program and commit to holding interest rates at current levels, the lowest in history, until at least 2022.

Similarly, the US Dollar resumes its previous downtrend with USD/JPY retreating from the last highs that have failed to overcome the pivot level of 105.60-70.

If this trend continues, it will be necessary to go below the last lows at 103.25 for the movement to gain a bearish momentum.

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