The US Political Drama Comes To An End In Style
Marius Paun | London, UK | Senior dealer | Friday 08th January 2021
What a busy week we had!
The US Congress had a meeting to certify the November Presidential Election which was interrupted when protestors took over the Senate chamber. Shots were fired, President-elect Joe Biden called it an insurrection, Donald Trump was blamed for encouraging the mob on Twitter and the US image was badly affected.
Meanwhile, the Democrats flipped over Georgia in the runoff election and gained two extra seats the Senate. Thus they will now control both Houses. Both parties have now the same number of Senators and in case of a tie, Vice President Kamala Harris will cast the deciding vote. The US political drama seemingly averted, the White House aide Dan Scavino posted a statement on behalf of Donald Trump accepting that a new US administration will be inaugurated on January 20. Regardless of the perceived ‘bad’ news, the major US indices made fresh record highs this week with many expecting a record year.
We also had the FOMC minutes of the December 15-16 meeting showing that most officials saw inflation risks weighted to the downside. The sharp increase in pandemic infections seen recently suggests the near-term risks have risen but vaccines are a game-changer, expected to shift the outlook over the medium term.
The Nonfarm payrolls data showed the US economy unexpectedly shed 140,000 jobs in December, the first decline since April with the jobless rate unchanged at 6.7%. The immediate reaction was rather muted.
China’s December Caixin Manufacturing PMI came out at 53.0 vs 54.7 expected which was a big drop from November 54.9. However, the positive side is that it stayed in expansion territory when the world is really struggling with a resurgence in Covid-19 cases.
The European Union negotiated up to 300 million more Pfizer vaccine doses amid intense media scrutiny in the recent weeks about the handling of the vaccine rollout. They gave the green light way after the UK and the US.
Back in the UK, a new strain now dubbed Kent strain (named after the area where it was first encountered) is wreaking havoc. The UK Prime Minister Boris Johnson ordered a third national lockdown starting on Tuesday. Schools were due to close and possibly not expected to reopen until after February half-term. The next few months will be a challenge for the National Health Service, even with the vaccine rollout.
OPEC also had its meeting and said there is plenty of downside risks for oil markets in the first half of 2021. Saudi Arabia voluntarily cut 1 million barrels from its output in February and March.
In the meantime, Gold moved higher, initially to $1959, only to collapse on Friday back to $1834. Bitcoin made headlines yet again reaching $42,000, a new all-time high. It’s mind-boggling considering it was ‘only’ $19,000 back in November last year.