Tuesday November 8

Stock prices rose leading up to the election. The S&P 500 rose 0.4% to 2,139 and the Dow Jones rose 0.4% to 18,332. When markets open tomorrow the new president will have been decided and markets will take to pricing in the outcome. The JOLTS today showed that job openings are still on the rise and some additional pressures that may lead to wage inflation. While stocks rose today, interest rates and the dollar both rose against peers, however risk on assets such as emerging markets rose. The two year Treasury yield rose 4bp to 0.86% and the ten year Treasury yield rose 4bp to 1.87%. 2yr vs 10yr remained at 1.01%. It is for the most part expected that barring some unexpected outcome to the election tomorrow that the Fed will raise interest rates when it meets next in December. USD rose 0.2% against EUR to $1.1021. USD rose 0.6% against JPY to Y105.11. USD rose 0.2% against GBP to $1.2371. However the aussia, loonie, kiwi, and the Mexican peso all rose against USD reflecting a risk on atmosphere and an election outcome more favorable towards Mexico and Canada. The peso rose more than 1% against USD to P$18.38. Gold prices also fell for the second consecutive day. In oil markets WTI and Brent both pulled back slightly. WTI fell 0.2% to $44.81 while Brent lost 0.7% to $45.85. Analysts estimate that markets will respond most immediately to outcomes in states such as Florida and North Carolina. Trump momentum will lead to risk-off while Clinton momentum will lead to risn-on. The VIX fell today to 17.95. The market for Fed funds futures is also pricing in more than an 80% chance that the Fed will move next month which is historically where it was when the Fed has raised rates in the past.

Tuesday November 8

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