As September comes to a close with equities having a weak month, the markets’ attention will turn to the presidential election, stimulus and the looming battle over the next Supreme Court nominee. Added to all of these factors is how the controversy surrounding TikTok will play out over the next few weeks. The amount of uncertainty between now and the election is high and normally leads to asset price pressures; however, the expectation is for volatility and uncertainty. I will be looking for any good news, as not much seems to be priced into risk markets after the sell-off in September.
The recent strength in the U.S. dollar is also worth watching, as the drop in commodity prices like gold has closely tracked. Given the challenges managing coronavirus around the globe and Brexit discussions, the dollar could remain strong for the remainder of the year. I will also be watching whether bond yields can break out of their recent range, as volatility in fixed income has dropped to record-low levels.
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