Equity Futures and Economic Indicators
The day commenced with a mild and steady sell-off in equity futures overnight. Following this, the US Leading Economic Indicators plummeted to their lowest levels since 2016. Interestingly, only stock returns were keeping the index above some notably low levels.
Market Movements
Despite this, Short-Term Interest Rates (STIRs) disregarded the drop and shifted more hawkishly. The market is now pricing in just a 50% chance of a second rate cut this year.
Gold and Crypto Prices
Gold and crypto prices initially surged but ended up being dumped. Coinciding with this, crude and bond yields, along with the dollar, moved higher as prediction markets and polls increasingly lean towards Trump.
Equity Buying Streak Ends
Prior to today, Hedge Funds (HFs) had been purchasing equities for six consecutive sessions. However, this streak ended today as the highest sell skew from HFs was observed since September 30th.
Stock Performance
Small Caps were the biggest losers, while Nasdaq just managed to remain unchanged. The Dow lagged behind the S&P 500. Furthermore, "Most Shorted" stocks took a significant hit on the day.
Sector Performance
Tech and Energy sectors managed to scrape out gains on the day, while Real Estate stocks took a beating as rates rose sharply.
Bond Market and Dollar Performance
The bond market experienced another rough day, with yields up 7-10bps across the curve. This was due to non-stop selling pressure from the European open. The dollar also rallied to its highest level since August 1st.
Gold, Silver, and Bitcoin
Gold surged to a new record high in the morning before experiencing a sharp drop. Silver, however, continued to outperform Gold. Bitcoin also had a tumultuous day, rallying up to $69,500 before falling back to $67,000.
Event Risk in November
The event risk for the first week of November is becoming increasingly clear. However, the implied move for the US presidential election stands at 2%, which is the lowest reading since tracking of the excess variance began.
Bottom Line
With only ten full trading sessions left between now and election day, the market is in a state of flux. The movements in equity futures, gold and crypto prices, and the bond market suggest a level of uncertainty in the market. What are your thoughts on these market movements? Do you feel lucky about the upcoming trading sessions? Share your thoughts and this article with your friends. Remember, you can sign up for the Daily Briefing, which is everyday at 6pm.
