Oil Still Trading At Bottom Of Overnight Range; Asia Indices Mixed

Despite the API reporting draws across the boards,  WTI remains rangebound, trading near the lower end of the US overnight session range as the medium-term demand picture remains shrouded under a cloud of uncertainty, even as the number of new coronavirus cases in the United States is now falling.
 
We should have seen a more significant bounce on the inventory data and favorable bend in some of the COVID-19 curves. But the big elephant in the room is the global case counts. The number of cases has crossed the 20 million mark. It's worth highlighting that it took six months for cases to reach 10 million after the first infection surfaced in China while the second 10 million took only six weeks.
 
Indeed, when it comes to oil markets, COVID-19 is never far from the conversation. Sure, there was better news on US COVID-19 data with falling hospitalization rates in California, Texas, and New York. Still, more significant increases in German case counts and reintroduced some containment measures in New Zealand pains the view.
 
And while this certainly does not help with the positive COVID health care view, the growing concern is when the weather in the northern hemisphere shifts the dial to frigid in winter months. (Only 2-3 months away) Medical authorities have warned of the potential for new virus outbreaks, which could foreshadow the winter of discontent.

Asia Open: Will investors start to cast a blind eye to the lack of progress on the next US fiscal package ?
 
Stocks in Asia are trading mixed after a rally in US equities fizzled late in the Wall Street session amid concern a spending package from Washington is not imminent.
 
The market seems to the like the safety of the US dollar today after US equities plunged in late trading when the virus rescue talks reached a stalemate in Congress that may last until September. At the same time, Joe Biden announced Senator Kamala Harris as his running mate.
 
However, risk markets are showing nascent signs of stabilizing in Asia as investors cast a wary but mostly blind eye to the lack of progress on the next US fiscal package. All the while, they're continuing to run with the premise that during an election year, no politician wants to wear the "Frugal Freddy" monicker while simultaneously thinking the ultimate pie in the sky remains the vaccine. After all, e-minis are still trading 3340, which is miraculous in its own right, given the COVID-19 economic beat down. 
 
 
I still think the most critical question for US equity markets despite the slight shift lower overnight is the move into Value/Cyclicals. Is this the start of something bigger, or is it just profit-taking/a small correction the likes of which we have seen repeatedly in the past? 

Gold falling again 

With the turn in the USD and Treasury yields in recent days, gold has been falling through some air pockets, and the moves have been considerable. 
 
Demand for safe haven assets slipped after positive Chinese data, a drop in trade talk risk premiums, and news that Russia has approved a vaccine for the coronavirus contributed to the freefall. 
 
So far this morning, retail brokers and Chinese names continue to lighten their positions, while trading houses have been buying on dips.
 
Also, there are concerns regarding the change in the Fed policy to 'run it hot' as we are in the early stages of the credibility curve reminiscent of the BoJ in 2013.
 
Markets are already losing faith that the Fed can control inflation using monetary policy, which has ten years or more of evidence supporting that view. The market will probably lose even more confidence in the Fed's reflationary powers if prices don't start rising in the next few months.
 
The Fed targeting higher inflation when it can't get inflation above 2.0% in the first place could be a bit like me targeting a golf score of 90, then shooting 101, then moving the new target to 75. It does not mean it's going to happen.
 
So gold is getting weighed down on two fronts, actual yields, and moderating inflation expectations.