An uneasy calm has descended on the markets since the end of the first quarter put a stop to the heavy liquidation in bonds and some gained the sense that commodities were perhaps a little overcooked. The rebalancing and retracements those two entailed could yet run further, but we very much doubt that we’ve seen the last of the inflationary wave.
The ink has not even dried on the US ballot papers (!) but the Market already thinks it knows what this will all mean. And then there’s Pfizer’s vaccine announcement – perhaps similarly preliminary in nature – but, hey, the Herd will always take every silver lining it can find. Some of the themes we touched upon at the end of the Summer are still in play: Japan has been attracting money, non-oil commodities are rallying, gold has lost some lustre, bond yields are creeping higher, and Value may just be topping out at last v Growth.
On the eve of what is shaping up to be a particularly momentous US election, we offer our view of what is at stake – both in the markets and out in the real world, far beyond the flickering screens of the trading room.