At the end of the first presidential debate on Tuesday (September 29), which was marked by personal attacks between the two and the lack of concrete proposals for the United States, some falls in the futures of the Main Stock Market Indexes, were triggered at approximately 10:30 p.m. in New York City.
Which you can appreciate below:
Despite the above, the mood would change the next day (Wednesday, September 30), as the release of better-than-expected macroeconomic data and hopes that U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin would meet for 90 minutes at the Capitol.
It is important to remember that the agreement between the parties has been delay by disagreements on the Democrats' demands for more aid to state and local governments and the Republicans' support for a provision that seeks to protect businesses from coronavirus-related lawsuits.
However, on Wednesday, both left the Capitol without reaching an agreement, committing to continue with the discussions, causing a correction at the end of the American session as traders discounted an agreement and quotes dropped as should have expectations not met.
Later that day, Mnuchin, an interview by FOX, Business generated expectations of an agreement by telling journalists that the negotiations "had a lot of progress in many areas" This caused a rise in the indices that continued until Thursday, October 1st.
However, the SP 500 goes negative midway through Thursday's session, as hopes for an agreement are dashed. The fall is because the Democrats announced that they are going to vote on their plan of 2.2 trillion, this vote had been postponed while waiting for negotiations with the Republicans, so the market has understood that there is no agreement if the vote already takes place, hence the falls in the stock market and the rises in the bonds.
We should not forget that all these expectations of a fiscal stimulus agreement over the last few days have equally boosted gold prices from lows near $1850 an ounce to nearly $1920 an ounce today.
The monetary stimulus could push Gold back for a short time, as it would give the economy a boost and this would increase bond yields (reflecting such an improvement), and in turn, lower bond prices (as yields and prices move inversely) and this lowering of the bond would also affect Gold's decline as both assets are highly correlated.
But, with the US presidential elections coming up, the greatest uncertainty is still to come in the coming weeks, so the safe-haven asset par excellence is Gold. After the elections, Gold will likely seek new lows where its pillars would be sustained by debt and inflation levels.
