I was enjoying a nice afternoon yesterday with my coffee and a piece of cheesecake, updating data for the trading session and everything looked fine. As I mentioned yesterday markets seem to be finding some momentum and some new trades don’t feel that far off. VIX futures were still in backwardation but only by about -2% which was progress.
Then the White House goes and announces a new round of tariffs and the S&P futures dropped -1.4% in a couple minutes. It would appear that this trade war business may be more than warning shots. If they go through with this proposed 100 billion more no doubt China will respond and round and round we go. It’s nearly impossible to predict how markets will respond but I would say at the very least it means that the progress the VIX futures were making towards comfortable contango will be slowed somewhat. The days of larger +2% / -2% moves we’ve been seeing in the last few months may not be over just yet. Let’s see how traders respond over the weekend and hopefully next week starts anew with more calm.
Today was also jobs day in the US so I’ll update the running charts:
US added 103,000 jobs in March, well below expectations but still positive, adding to the record streak we are in since 2010.
Unemployment rate and labour force participation rate remain steady.
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