Morning Update – 10/11/2016 – by Arjun Lakhanpal

Morning all.. Another massive session yesterday that saw Wall St not only reverse the days losses but closed up 1.1%. The reversal in risk assets was amazingly strong after investors seemed to think Trump can implement fiscal stimulus quickly and spending will drive yields higher. This took the dollar screaming higher against many currencies like the JPY but Commodity currencies remained bid as commodities, especially metals continued to rise. Copper, iron ore and Steel all making big gains. Some weakness seen in Kiwi as the RBNZ cut rates but this was expected and after the announcement we had a reasonable rally but it failed to hold. WSJ cites a Trump Advisor: Trump not looking for a Yellen’s resignation; possible Trump won’t nominate Yellen for a 2nd term. Fed’s Williams: case for gradually hiking still makes sense after the election; Fed aware of & will take into account fiscal policy; politics is not part of the Fed’s regular discussions; economy is close to full employment; fiscal policy is one of many factors for the economy; don’t want the economy to be too hot or cold.. US yields made a high of 2.08% in NY but have drifted off to 2% taking USDJPY away from the highs and lifting EUR slightly. Sources on Goldman Sachs: considering moving some assets & operations from London to Frankfurt; move is to qualify for ECB supervision. This morning we get French and Italian Industrial Production but the dominating factors will be the performance of stocks and US yields again. Good luck..