Either that or everything just got more expensive in dollar terms.
From Marc to Market:
Overview: More than 95 mln Americans voted before today, and many observers warn of a cliffhanger that could be decided in the courts. The polls sand surveys show strong odds in favor of a Democratic sweep. Looking at the capital markets, nothing looks amiss. The biggest rally in the S&P 500 in three weeks yesterday (1.2%) underpinned the recovery in global shares today. Although Tokyo markets were closed for a holiday, nearly every market in the Asia Pacific region rose by more than 1% as the regional benchmark rose for a second session. The Dow Jones Stoxx gapped higher today as its recovery enters the third day. The S&P is poised to gap higher at the open. Benchmark yields are mostly a little higher in Europe. Italy and Greece are faring better. The US, UK, and Swedish 10-year yields are 3-4 bp higher, while Australia's 10-year yield is off five basis points following the RBA's easing. The US dollar is heavier against the major currencies, even the Australian dollar. The euro looks to snap its six-day slide, as does the JP Morgan Emerging Market Currency Index. The Turkish lira remains under pressure despite its slightly less than expected rise in CPI. Gold is hovering around $1900, while oil is extending yesterday's dramatic recovery. The December WTI contract posted a key outside reversal yesterday by falling to new lows (~$33.65) before rebounding over $37. It is trading above $38 now amid talk that OPEC+ will delay the planned output increase.
Asia Pacific
The Reserve Bank of Australia did not surprise. It cut the cash and three-year target rates to 10 bp from 25 bp and announced an A$100 bln, the six-month bond-buying operation that will focus on the longer-end of the survey (5-10 years). The RBA's central scenario now sees the economy expanding by 6% in the year to mid-2021 and 4% in 2022. Unemployment is now expected to peak a little below 8% rather than 10% as it previously feared. Underlying inflation is expected to be around 1% in 2021 and 1.5% in 2022. The RBA's moves appear aimed at strengthening the recovery rather than improve market functioning or boosting inflation. It also appears to assume that other countries will ease as well.
Countries seeking to impose their will on others will use what levers that have. The US has used access to the dollar and to its technology to punish countries for policies for which it does not approve. China does a similar thing with the levers it has. It has used access to its domestic market to punish others for actions that go counter to its interests. Canada has felt its wrath, and now Beijing has turned its attention to Australia. Canberra has been vocally critical of China's actions in Hong Kong, but more importantly, it has solidified its role in an emerging regional effort to counter China's influence. China has banned timber from Queensland, identified a second barley producer it will ban. Rock lobster shipments have been subject to new inspections that seem part of Beijing's campaign, which looks set to escalate to include sugar, copper ore, and copper concentrate. Australian wine and wheat are also in China's cross-hairs, and a formal announcement is expected soon....
....MUCH MORE
