Markets kicked off a new trading week in a risk-off mode, with the U.S. dollar rising, stocks selling off and gold prices plunging. It’s hard to point to just one single reason why this is happening, notes BBH Global Currency Strategy. “[There are] rising viral numbers in Europe, rising hard Brexit risks, softening recoveries in the major economies, rising political risk in the U.S., and a negative report on the global banking sector. Some of these drivers have been present for weeks, if not months, but the confluence of so many negative factors has been too much for equity markets to ignore,” says BBH. The big new political headline the markets are digesting is the death of Supreme Court Justice Ruth Bader Ginsburg on Friday, which is creating a lot of volatility. “The most direct impact is likely to be further delays in the stimulus package. Indeed, we think it has become less likely that a deal comes before the election, as the Republican-led Senate appears to be marshaling all its forces now into pushing through a replacement for Justice Ginsburg,” BBH writes. The U.S. dollar, in the meantime, is making gains with the DXY last trading at $93.60, up 0.73% on the day. “With so much uncertainty, no wonder the markets are taking some profits now and moving to the sidelines with 43 days left until the election.”
