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US crude above $75pb, as US stock and bond rally extends [Video]

The barrel of American crude finally cleared the $74/75pb resistance range on the mounting geopolitical tensions in the Red Sea and traded at $76pb on Tuesday.

Elsewhere, the dovish Fed expectations continued to remain in the driver seat and drive the US stock and bond markets higher.

The US dollar remains under a decent selling pressure, gold extends gains on the back of softening US yields and the EURUSD continues to push higher above the 1.10 level on the back of hawkish European Central Bank (ECB) commentaries. Yet the rally in the Japanese yen starts giving signs of exhaustion into the 140 mark in the short run.

The Nikkei continues to find buyers despite a stronger Japanese yen, as the S&P500 buyers will certainly not back down before sending the index to a fresh high this week, or the next. The index was trading just 0.5% below its ATH yesterday, so it would clearly be a shame if we finished this year without an S&P500 record, no?

But yes, the market optimism is overstretched, the Fed’s rate cut expectations are unfunded – in that, yes, the Fed will probably cut rates but not at the speed that’s been currently priced in – the oversold market conditions do hint that a downside correction would be healthy. Once the Santa high fades, the hangover will hit. 

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Ipek Ozkardeskaya

Ipek Ozkardeskaya began her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients.

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