While you were sleeping, Earnings, Market Technical and Global Flows
Latest Polls, , Geopolitical and Trade Risks, Candidate Moves, and Voter Shifts
Overall theme: Cautious optimism on U.S. equities (e.g., futures rebounding), but watch for shutdown escalation and Treasury supply.U.S. Government Shutdown and Fiscal Pressures
Shutdown enters record 36th day, costing $10-30B/week; moderate Dems signal potential bipartisan deal for partial funding, boosting liquidity hopes. Senate optimism post-lunch could end impasse soon, with $1T Treasury cash balance set to flood markets by mid-Jan 2026.
Trading Action: Buy dips in rate-sensitive assets (e.g., long TLT ETF for bonds); monitor SOFR (now 4.00% from 4.13%) for repo stability—potential tailwind for banks (e.g., BAC targets 16-18% ROTCE). Volatility hedge via VIX calls if no deal by next week (airspace halts risk). Short-term bullish for USD as fiscal risks ease.
Labor Market and Economic Data
ADP Oct private payrolls +42K (beat est. +30K, rebound from -29K); wage growth flat MoM for stayers/changers, signaling cooling inflation. Losses concentrated in Northeast/small-medium firms.
BofA sees healthy growth but employment weakness; consumer spending solid, credit stable (watch lower-end if labor softens). No recession assumed in targets.
Trading Action: Bullish for cyclicals (e.g., long SPY above 6800 ES level); gold pulls back 0.9% to $3,967/oz post-data—consider profit-taking or short if yields rise. 2Y/10Y Treasuries +1bp to 4.097%/3.584%—fade rallies in growth stocks if NFP confirms weakness Friday.
Market Technicals and Global Flows
ES futures >6800 HOD, rebound from lows; Nikkei -3% on BOJ hold/yen weakness (now 8-mo low). Flat S&P to Jan, then “blast off” post-shutdown.
German factory orders +1.1% (beat, auto/electrical lead); ECB’s Stournaras eyes more easing if U.S. inflation spills over.
Trading Action: Long ES/SPY on rebound (target 6800+); short JPY pairs (USDJPY) on BOJ inaction. Watch retail flows—Goldman notes “testing” key levels; potential squeeze if shutdown resolves.
Geopolitical and Trade Risks
Russia preps nuclear tests response to U.S. (Trump comments); Putin calls it “serious,” directs by U.S. actions—escalation if moratorium ends.
Trump: End filibuster ASAP (mistake not to), Xi “friend as much as can be”; stock market to hit records despite shutdown blame.
China mandates domestic AI chips for state-funded data centers (hits NVDA/AMD/INTC); Serbia meets EU/Russia on sanctioned oil.
France probes Shein suspension (suspends 3rd-party sales).
Trading Action: Safe-haven tail—long gold/oil if Russia-U.S. tensions spike (WTI watch $70+); short China-exposed tech (e.g., NVDA) on chip curbs. Bullish U.S. equities on Trump optimism (records ahead), but hedge with puts if nuclear rhetoric heats. Trade talks (Canada-U.S. stalled) pressure CAD—short USDCAD.
Net, Net: Bullish U.S. risk assets on data/deal hopes, but layer in hedges for fiscal/geopolitical wildcards. Monitor Treasury refunding for supply risks.