Stocks are holding up fine, but other legs of the post-election moves in markets are continuing to unwind.
Among them is king dollar (UUP, UDN) - the dollar index is lower by another 0.8% this morning, and now down about 3% for the year. Excuses? Have your pick, but currently making the rounds was yesterday's Trump press conference at which no details on policy stimulus were offered. Up nearly or even more than 1% vs. the greenback this morning are the yen (NYSEARCA:FXY), loonie (NYSEARCA:FXC), euro (NYSEARCA:FXE), pound (NYSEARCA:FXB), aussie (NYSEARCA:FXA) and Swiss franc (NYSEARCA:FXF).
Interest rates continue to back up as well. The 10-year yield peaked near 2.60% in mid-December, trickled lower into year-end, and this morning is down another five basis points to 2.33%. TLT +0.6%, TBT -1.2% premarket
Then there's gold (NYSEARCA:GLD) - it stood at about $1,300 per ounce at election time and plunged to as low as about $1,135 in the weeks following. It's higher by 0.7% this morning to $1,205 per ounce - now up about $50 per ounce for the year.
The dollar index kicked off the new year by making its biggest one day gain in over two weeks, rising 0.4% to 102.63, continuing the 2016 momentum that saw it post a fourth consecutive annual rise for the first time in over 30 years.
Most analysts expect the greenback to continue strengthening in 2017, because the economy appears likely to withstand multiple Fed rate hikes, making it more attractive to hold dollar-denominated assets.
The dollar continues to make gains after Janet Yellen told University of Baltimore graduates they are entering the strongest U.S. jobs market in a decade.
Although she stayed away from any mention of monetary policy, the Fed Chair said wages are picking up and there are more job openings, but cautioned that the economy still faces weak productivity and low growth.
The yen has plunged 11% vs. the dollar since Pres.-elect Trump's election victory last month, surpassing the Mexican peso's 10% slide to become the worst performing major currency during the period.
The weaker yen will make Japan’s exports more competitive and could boost growth, and the Nikkei index has gained for eight straight days, but bond prices have been under pressure amid a global debt selloff.
In China, fears that a rising dollar will destabilize trading in the yuan has send the currency to its lowest against the dollar in more than eight years and raising concerns that outflows could increase.
"The bar was so low on Trump to the point people were expecting markets will go down 80% and global depression - and now this guy is the Wizard of Oz and so expectations are high," Jeff Gundlach tells Reuters. "There's no magic here."
Back to reality: Government programs take time to implement, rising mortgage rates aren't great for the "psyche" of the middle class, and HRC supporters are in no mood to spend money.
"There is going to be a buyer's remorse period," he says. Yields (TLT, TBT) have peaked and should move sideways from here, the dollar (UUP, UDN) is going to fall, and gold's (NYSEARCA:GLD) next move is higher.
DoubleLine Total Return Bond Fund (DBLTX, TOTL) is up 2.12% through the end of November, besting 63% of peers. On a three-year basis, it's up 3.46% annualized, topping 93% of peers.
Trades that performed best in the three weeks since Donald Trump's election victory are taking a breather, with the dollar and U.S. bond yields falling from recent peaks and equity index futures signaling stocks will slip from all-time highs.
The dollar could face further resistance in the week ahead given potentially risk-laden events such as the midweek OPEC meeting and Italy's Dec. 4 referendum on constitutional reforms.
The dollar is climbing past more of last year's peaks against the euro, with only the March 2015 high of $1.0457 standing in the way of a push towards parity that banks are again saying is on the cards.
With U.S. markets out for the Thanksgiving holiday, trade will be thinner, but the dollar is expected to extend its surge after another strong batch of U.S. economic data on Wednesday.
The greenback is now worth more than 7.5% against a basket of major trading partners than it was three months ago.
We'll get today's weakish data out of the way first - jobless claims unexpectedly jumped last week, and new home sales disappointed in October (and Sept.'s print was revised lower).
On the other hand, there was an unexpected big lift in consumer sentiment since the election, durable goods for October, surprised to the upside, and the 10-year Treasury yield has popped to more than a one-year high of 2.39%.
The dollar index has surged to its highest level in about a decade, with particular strength against the yen (NYSEARCA:FXY) and euro (NYSEARCA:FXE). UUP +0.7%
Gold, on the other hand, continues its big retreat, down 2.15% to $1,185 per ounce - its lowest price since February. GLD -2.15%