STATE OF THE MARKETS

Markets await for Georgia. US equities recovered some of the earlier loses done on Monday as Georgia election results came in and it would be couple of days before it’s final. In a most likely scenario, Republican will retain control of US senate and markets goes on as about its usual business. Shall Democrat won both seats, then fear of further tax hike could derail the markets. The benchmark US 10Y bond lost demand as yield surged higher close to 1% as investors started the new year with seeking better returns in riskier markets.

Crude rebounded sharply, closed above $49.90/bl, as OPEC+ finally reached an agreement for a supply cut with Saudi Arabia voluntarily took the hit with 1m barrel/day cut starting next month. Gold edged higher, closed above $1,949.35/oz as markets fears of rising inflation post economic stimulus on the falling value of the Greenback.

In the FX space, devalued Dollar is benefitting the commodity currencies the most, in all three horizon, though CAD remain stagnant in the long term. Block orders suggested a move lower in EUR/GBP as confirmed by turnover in all three horizon. Aussie benefitting from the rise in gold, finally took the helm of demand in all three horizon, though recent CFTC reports suggested that speculators were net short in Aussie.

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