Gold, Bitcoin, and the Dollar Experience a Surge Ahead of Retail Sales; Markets Seem to Anticipate a Trump Victory

VIX Remains Above 20 as Stocks Show Gains

Despite stocks showing gains, the VIX remains 'sticky' above 20. The short-term volatility market is anticipating some movement around the retail sales print, which is likely to be a significant number according to BofA. Following this, some calm is expected before the storm of the election outcome and the FOMC meeting.

Market Predicts a Trump Victory

In the last 12 days, the market has shown a strong conviction that Trump is going to win the election, as noted by Druckenmiller in a recent Bloomberg Television interview. This can be seen in the performance of bank stocks and cryptocurrencies. Druckenmiller, a former Soros money manager, also predicted that it's "extremely unlikely" that Democrats will gain control of Congress even if Harris were to win the presidency. He suggested that a red sweep is more probable than a Trump presidency with a blue Congress.

Stocks Shift in Favor of Trump

Since the Trump-Harris debate, stocks have shifted sharply in favor of a Trump victory. On the day, Small Caps once again outperformed, while Nasdaq ended the day unchanged. The Nasdaq underperformed Russell 2000 once again, pulling that ratio down to the lower end of its channel from the last year.

Performance of Treasury Yields and Credit Spreads

Treasury yields were lower across the curve today, but only modestly. The long-end continues to outperform on the week. Meanwhile, credit spreads remain extremely tight, both relative to equity risk and historical cycles.

Surge in the Dollar, Gold, and Bitcoin

The dollar pushed higher once again, reaching its highest since August 2nd's payrolls. Despite the dollar's strength, gold rallied up to a new closing record high. Bitcoin also continues to surge, topping $68,000 today for the first time since July.

Crude Prices and USA Sovereign Risk

Crude prices remained steady, with WTI holding just above $70.00 ahead of the API inventory data. Meanwhile, USA sovereign risk has surged to its highest in a year.

Bottom Line

The markets seem to be anticipating a Trump victory, as reflected in the performance of stocks, cryptocurrencies, and the dollar. However, the uncertainty surrounding the upcoming election and the FOMC meeting is causing some volatility. What are your thoughts on these market trends? Do you think they accurately predict the outcome of the election? Share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, which is every day at 6 pm.