December 24, 2018
In what was a surprisingly quiet trading session following the weekend’s “Powell in Turmoil” newsflow and Mnuchin’s bizarre “liquidity is fine” announcement, which only sparked memories of similar notices from the peak of the financial crisis, which some speculated could result in a major hit to the market in Monday’s holiday-shortened session, S&P futures suddenly tumbled in a what appears to be zero liquidity just around 7am (when we suppose at least some human traders walked in to their trading desks or logged in from the Maldives)…
… dragging all US equity futures sharply lower.
The sudden plunge came hours after Treasury Secretary Mnuchin said he called the heads of the 6 biggest banks (JP Morgan, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo and Citigroup) from Cabo, to discuss recent market turmoil and assure liquidity conditions, while also attempting to assure markets that Powell would not be ousted from the central bank following an earlier report that said Trump has repeatedly discussed removing him. On top of that, the U.S. government shutdown now in its third day, looks set to last past Christmas as negotiations between Democrats and the White House continue over Trump’s demand for border wall funding.
“It would be extremely damaging for the President to carry through on his vague inquiries about whether or not he can fire the head of the Federal Reserve,” Stephen Davies, CEO and co-founder of Javelin Wealth Management told Bloomberg TV. “That will do market confidence no good whatsoever.”
As futures tumbled, gold continued it sharp recent ascent, rising to over USD 1262/oz which is just under a 6-month high. The yellow metal is benefiting from US political uncertainty as a partial government shutdown has begun alongside continued dollar weakness.
- A d v e r t i s e m e n t
The sudden futures plunge…