- Late-in-the-week news that the US killed a top Iranian general unsettled global capital markets and bolstered havens
- Systemic event risk like geopolitical instability and growth concerns will co-mingle with key events like Friday NFPs
- Below are links to fundamental and technical outlooks for a range of key markets
We are coming off of holiday-curtailed conditions and already there is market turbulence showing up in the opening days of 2020. Ahead, the first full week of the year, we will face a new systemic risk that will complicate the familiar themes. Geopolitical tensions are not exactly new for global financial markets, but we have not had to deal with many such threats recently – or at least the market has not paid what has been unfolding any serious mind. That is until now. The news late this past week that the US had struck a base in Iraq that killed one of Iran’s top generals sent risk-leaning assets like US indices and Yen[1]-based carry trades tumbling while safe havens such as gold[2] have surged. Is this a theme that will usher in a permanent volatility for the new year or will the market retreat back into obliviousness as it did with the last US-Iran flare up?
Geopolitical risks aren’t the only open-ended theme on tap moving forward. Trade wars, recession fears and monetary policy will all stir in the week ahead. From the trade perspective, the US and China are supposedly due to sign the phase one deal the week after, but former’s conflict with Europe is still on the path of escalation. For growth concerns, the optimism in a trade thaw is threatened by the manufacturing tremor seen in data this past week. The United States’ ISM service sector report will speak
