China, Brexit, and the US labor market indicators are the main driving force of the market.

The past week was marked by relatively good performance in the US labor market amid the ongoing pandemic. Investors didn’t perceive the decrease in the growth of employed people negatively, since the record numbers of the infected make the players ready for anything. Moreover, the rest of the indicators came out not so bad. A decrease in the unemployment rate and an increase in wages is quite capable of leveling the temporary slowdown in the labor market. The market reacted to the data quite logically.

US Treasuries showed strong growth dynamics in yields to 0.973%, reflecting inflation expectations. The 2-year bonds reacted slightly, as the FRS will not consider raising rates over the long term, even in the context of higher inflation rates. Taken together, the credit market reflects calm. The difference between 2-year and 10-year bonds has widened significantly, indicating a renewed appetite for the risk in the near future.

China is also demonstrating its strength. The slowdown in imports to 4.5% in November and the acceleration in export growth to 21.1% directly indicate GDP growth in the fourth quarter. For investors, this is like a headache pill amid rising morbidity and friction in the Brexit negotiations.

Meanwhile, the weakest side of the market is the European one. The previous good news about the most likely positive outcome of the negotiations on Britain's withdrawal from the European Union was not confirmed. On Friday, it was reported about the withholding of consultations. On Monday, the question of the possibility of a complete refusal from negotiations by Boris Johnson came up the market. The No-Deal Brexit option returned to the European market, bringing pressure mainly on sterling, euro, and the European risky assets with the exception of the UK FTSE 100, which is trading up to 0.45% as a result of the fall of the GBP.

Market indicators

European and American indices are trading in the red zone.

S&P 500 (F) 3.683.88 -14.12 -0.38%

Dow Jones 30.218.26 +248.74 +0.83%

DAX 13.254.05 -44.91 -0.34%

USD Index 91.010 +0.316 +0.35%

• – Canadian PMI at 17:00 (GMT + 2);
• – Boris Johnson and Von der Leyen’s meeting in the evening.

by JustMarkets, 2020.12.07

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.