S&P 500 is eyeing 3000  

US Markets 

US equity markets put in a record-setting one-way holiday-shortened session supported by the backdrop of a chorus of central banks shifting to a more accommodating monetary policy stance. However, the fall in yields, especially in the context of the  breadth of negative-yielding alternatives, has increased investor appetite for high dividend-yielding equity risk hoping that this next wave of central bank monetary infusion will provide a foundation to ensure the global cyclical bottom is set while offering a  welcoming climate to extend this bullish trading cycle in global equity markets.

While the appointment of Doves to the Fed board is buttressing that view

Things are looking positive to kick off the Asia session!

The Lagard Rally?

IMF MD Lagard’s nomination as next president of the ECB caused bonds to rally as under the Lagard guidance the IMF has become less of a think tank and has instead pushed the envelope for more innovative economic policy measures, which suggests a continuation of the well-founded expectation that she will pursue  President Draghi’s creatively dovish approach.

However, in a time when cracks are appearing in the Eurozone substructure, the role of the central banker in Europe is taking on a much more political position, and while it’s expected she will stay true to the Draghi mantra, her political expertise is what will eventually shine through.

Oil Markets

Despite an OPEC meeting that arguably over-delivered relative to expectations and another large US crude inventory draw oil prices continue to struggle to fill this week’s cavernous gap lower as the recent wave of macro data, especially the global PMI barometers remains a significant cause for concern s  the current economic realities very hard to ignore.

However, oil prices rebounded into the July 4^th US holiday on a short-covering rally, while receiving a fillip from a significant drop in U.S. gasoline supplies which has helped crude prices gloze over this week’s considerable downturn.

All the while commodity prices are getting a boost from an anticipated extension of the global central bank monetary policy gravy train.

But supporting the bullish medium-term oil view, we must remind ourselves that OPEC and key non-OPEC producers will continue to adopt a whatever it takes the attitude to support prices and the agreement on a charter of perpetual cooperation between OPEC and key non-OPEC producers should help that view.

Gold Markets

This latest rally in gold is a surprise, but the yellow metal is sticking to the most recent tendency to remain firmly bid on dips

Flows have turned better offered overnight with the S&P 500 eying 3000 and the USD remaining firm, but it’s questionable what if any impact the USD is having in this recent Gold ramp.

One-month options jumped 2 and 3 vols yesterday suggesting the move was unexpected but also confirms our view this rally is options-driven as cash market has been trading thinly ahead of the July 4 US holiday and the US Payrolls on Friday that looms ominously.

However, with the ADP payrolls report missing analyst’s expectation it continues to support the broader US economic slowdown narrative and even with the US and China back to the trade war negotiating table a Fed cut remains a lock and should stay supportive for Gold markets.

G-10

As the dollar nudges its way into a July 4^th holiday session, the dollar has weakened off marginally as focus shifts to the Friday’s payroll.

This article was written by Stephen Innes, Managing Partner at Vanguard Markets LLC