U.S. Debates, World Uncertainty, And Europe’s Bank Woes Rule Markets

It seems unreasonable to believe that investors and traders are worriedly waiting on the outcome of tonight’s debate, but many analysts are saying it is so. We’re serious doubters.

Gold found itself held pretty much in check today, up a mere 20 cents due to dollar weakness. Regular trading dragged down the price in sluggish trading. Silver took quite a bit more of a beating, falling 1.50%.

West Texas Intermediate crude oil jumped another 3.25% but it had no effect on equities, which tumbled about 0.85% on all three major U.S. indexes.

However, New York may have been taking the lead of Europe, which caught the jitters on banking sector matters. The German government told Deutsche Bank it would not help it negotiate a “suggested” $14 billion assessment by the U.S. Department of Justice concerning a number of banking irregularities.

Deutsche Bank’s stock slid to its lowest level in twenty years, trading right around $12 per share. This news comes on renewed anxiety in the European banking system due to Brexit. The DAX was down over 2.00%, the FTSE about 1.30%.

These are particularly choppy banking waters we are going through right now and could put a very interesting spin on precious metals’ direction. Stay tuned.

Asian markets were also off considerably, although they are more worried about OPEC and its allies coming to an agreement on freezing production, which would hurt Asian economies. It should be noted that nowhere near enough oil is produced in the Far East for its own needs and it is entirely reliant on either OPEC, Russia, the U.S. or Canada. Any volatile upswing in oil could seriously hurt China, Japan, South Korea and the emerging economies of Indochina.

The U.S. 10-year bond yield fell below 1.60%. That is an indicator that markets are resigned to the low rates sustained at last week’s FOMC meeting and traders are working to have the real marketplace reflect the status.

The Bank of Japan admitted today that it could not control the relentless upward movement of the yen versus the dollar despite its attempts to talk down the important haven currency. Perhaps Japan is too stable?

The VIX volatility index popped by more than +18% today, communicating through bets placed that many are indeed worried about the debates tonight. Without getting into the partisan thick of it, the choice on November 9^th is going to be between continuity and change, regardless who you personally favor. We look for volatility to come in spurts, then fall back. Indeed, volatility will be volatile.

On that same note, the probability of a rate hike at the November 2nd Fed meeting, shows traders are looking for only a 10.3% chance. No move before the election sounds right.

Wishing you as always, good trading,