Weekly Market Recap – August 14, 2020

In the Markets

The US unemployment claims figure came in at less than one million (963,000) for the first time in 21 weeks. Core retail sales rose 1.9%, which was higher than the 1.2% expectation; sales at stores and restaurants have now risen for three straight months after plunging in March and April. On Wednesday, the UK’s Office for National Statistics reported that Q2 economic output fell by 20.4% from the first quarter, the worst recession since record keeping began in 1955. This GDP contraction was more than twice the size of the US decline of 9.5% during the same period. Former Vice President Joe Biden announced his choice of Senator Kamala Harris (D-CA) as his running mate.

The DJIA rose 497.54 from the previous week (+1.8%), closing at 27,931.02 on Friday. The S&P 500 added 21.57 points, ending at 3,372.85 (+0.6%), and the Russell 2000 increased 0.5% with a 0.65, taking it to 126.53 at the close. The NASDAQ Composite, for a change, did not make a new all time high during the week, but held its ground with the other equities benchmarks. It’s Friday close of 11,019.30 was due to ticking up only 8.32 (+0.1%). The VIX slipped slightly with a 0.16 decline (-0.7%) ending at 22.05 for the week. The US Dollar Index continued its downtrend, falling 0.30 (-0.3%) to 93.09 on Friday.

On Tuesday, in reaction to Russia’s positive news on the coronavirus vaccine front, safety-minded bondholders began selling, and a spike in Treasury yields followed. The yield on the benchmark 10-year Treasury note climbed 6 basis points to 0.6407% and the yield on the 30-year Treasury bond rose 8 basis points to 1.3252%. CME Treasury futures tumbled. The September 30 year T-Bond contract went from 181 to 179 that day, and ended the week at 177-27, which was its lowest weekly close since June 19th (177-09). This kicked off a wave of US dollar strength and liquidation of precious metal positions. The sharp sell-off in gold and silver was exacerbated by margin call selling that resulted in Comex gold futures having the steepest one-day dollar decline since April 15th, 2013. After the abrupt correction, the precious sector recovered in the following days. The week’s metal activity included gold futures losing $78.20 (-3.9%), ending at $1,949.80 per troy ounce. Silver dropped $1.45 (-5.3%) to its $26.089 settlement price. Platinum and palladium, both declined, but not as sharply as gold and silver. The former eased $11.30 (-1.2%) to its $959.10 close, while the latter retreated to $2,143.80 (-1.5%) with a loss of $32.80 in the September contract. The base metals that we cover in our recap were mixed. Copper firmed 6.65¢ (+2.4%) to close at $2.8590 per pound. LME aluminum for 3-month delivery slipped $25.00 dollars per ton, ending at $1,746.00 (-1.4%).

Energy futures climbed across the board by varying degrees for the week. August WTI closed at $42.01 per barrel, a $0.79 increase (+1.9%). Brent added $0.40 (+0.9%), taking it to $44.80 at settlement. RBOB gasoline booked a 3.1% increase (+3.70¢/gallon), printing $1.2446 at the close. Heating oil settled at $1.2367 by adding 1.68¢/gallon to its price, increasing 1.4% from the previous Friday. Natural gas futures ended at $2.356 per MMBtu, the highest end-of-week close in three and a half months. September contracts advanced 11.8cents for the week (+5.3%). The surge on Friday stemmed from higher than normal temperature forecasts for the Western US and Canada. Bulls were also encouraged by statistics on higher export demand and weakening production.

S&P’s GSCI sustained its steady strength, gaining 7.02 (+2.0%) to 352.17 at the close, its highest end-of-week settlement since March 6th (366.59). Rising prices dominated the agricultural sector. Soybeans rallied 31¼¢ last week (+3.6%) to close at $8.98¾ per bushel. Corn climbed 17¼¢ (+5.4%) to a $3.38 settlement price. Wheat increased 4½¢ (+0.9%) ending at $5.00 for the week. In the ICE softs, the Europe vs. US coffee arbitrage is unwinding, as Robusta advanced by 3.7%, while Arabica retreated by 0.6%, settling at $1,445 per metric ton and $1.1470 per pound, respectively. Sugar jumped 3.4%, gaining 0.43¢ to close at 13.10¢/pound. Cocoa slid lower, ending Friday’s session at 2,436 (-4.3%) losing 110 points. Cotton rose 0.49 (+0.8%) to 62.85 in the December contract. Livestock improved with hogs outpacing cattle. October hogs rose 4.0% (+2.045) to a 53.020 close, while cattle ended at 110.230 with a 3.770 increase (3.5%). Milk added 0.65 (+4.0%), closing at 16.88 for the week. The star performer was lumber. Although not in the S&P GSCI, and with minimal futures volume, lumber’s price reached an all time high on Friday, $726.50 per 1,000 board feet, up $78.50 (+12.1%), with an 80.0% increase year-to-date. The COVID-19 era has spawned a building boom in the US, spurred by low interest rates.

World Cup Trading Championships®

In Futures, Michael O’Keeffe has held the top position, based on the end of week standings, for the 18th week in a row with a 464.4% net return. Stephan Seibert moved up to 2nd with a net return of 241.2%. Orhan Özcan moved to 3rd with a net return of 216.9%. Yuwen Cao and Stefano Serafini rounded out the top 5 with net returns of 210.9% and 178.3% respectively.

In the Forex division, Nicholas Ridley remained in the top spot with a 225.3% return. Jan Smolen held 2nd at 122.9%, with Sergey Shirko finishing the week in 3rd with a net return of 118.2%. Raul Glavan and Patrick Nill rounded out the top 5 with net returns of 120.1% and 72.4% respectively.

In the futures division of the 2020-2021 Global Cup Trading Championship, Wayne Wan held first with a net return of 73.3%, with Adrian Koemel following in 2nd at 65.5%. 3rd place is currently held by Stefan Seibert with a net return of 56.2%. Jan Smolen and M. Vontobel of Tirutrade AG finished the week in 4th and 5th at 48.9% and 39.2% respectively.

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