So the blue wave has ebbed into little more than a puddle, and even if Joe Biden manages to win the White House it will be a close-run thing. Certainly it now seems as if the Senate is likely to remain in GOP hands, which suggests a significant headwind to massive stimulus moving forwards. So it looks as if the cheapest election gamma was at the long end of the curve, with the blue wave steepener coming under some pressure.
Declarations of victory notwithstanding, it now seems as if there will be a potentially substantial wait to count votes and declare winners in battleground states. We all knew this was a possibility, and here we are.
Other blue wave trades coming under the cosh include the RTY versus NDX or even the SPX, and of course the dollar. Unfortunately, the market didn’t play nice this time around, and at one point early in the proceedings last night it looked like all of those blue wave trades were breaking out. That’s always a dilemma for a trader -- do you trust the price or wait for the data? In this case, the latter choice was the correct one.
Declarations of victory notwithstanding, it now seems as if there will be a potentially substantial wait to count votes and declare winners in battleground states. We all knew this was a possibility, and here we are.
Other blue wave trades coming under the cosh include the RTY versus NDX or even the SPX, and of course the dollar. Unfortunately, the market didn’t play nice this time around, and at one point early in the proceedings last night it looked like all of those blue wave trades were breaking out. That’s always a dilemma for a trader -- do you trust the price or wait for the data? In this case, the latter choice was the correct one.