It's been a relatively slow day so far, with stock markets in Europe mixed and US futures broadly similar as investors look ahead to the Jackson Hole event.
It hasn't exactly been an action-packed week so far, with the vaccine news on Monday being the only real catalyst for the markets. It very much has a mid-summer feeling to it and while investors are pinning their hopes on the Jackson Hole event to spruce things up, I think they may be a little disappointed.
Barring fine tweaks, I don't think central banks are going to have much to offer for the foreseeable future. Rates are extremely low and financial markets are stable, policy makers have done their job and laid the groundwork for the economic recovery.
It's now over to the elected officials to do their jobs, manage the spikes and the economy and hope that one of these vaccines ticks all the boxes later this year. The message from central banks in the meantime is unlikely to change, they will remain ultra-accommodative for a significant period of time.
Oil prices ease off highs and storms hit Gulf of Mexico
Oil prices are easing after pushing back towards their highs earlier in the week as two tropical storms headed for the Gulf of Mexico. With more than 1.5 million barrels a day being taken offline in anticipation of the storms, crude prices inched up. Whether they will be sustained may depend on the level of damage that's sustained and how long it will take the facilities to get back up and running again. We haven't seen as big a surge in oil prices as we may have otherwise seen but this isn't exactly an undersupplied market.
Gold lower as yields continue to rise ahead of Jackson Hole
Gold is continuing to face near-term difficulties as US yields continue to edge higher, lifting the dollar with them. The yellow metal is off around half of one percent today and finding support again around $1,920. Traders have been disappointed at the Fed's refusal to be drawn on yield curve control so any suggestion by Powell over the next couple of days that it is being consider could depress yields once again and weigh on the dollar, putting some life back into gold. I'm just not convinced officials deem it necessary at this stage when yields are already so low. It would take a big jump for such a shift to make a real difference.
Related: Who Needs Yield Curve Control?