EQUOS — Morning Update — October 20th

American politicians seem to be toying with our emotions. After the weekend, markets lifted as a new deadline to reach a stimulus bill was announced, but yesterday, hopes of such a deal faded and markets dropped. It’s also worth noting that, on a global scale, the virus is still at large. We’ve now hit 40 million cases and many European and Middle-Eastern countries are tightening measures while, in the US, some states see new surges — just two weeks before the elections.

The S&P is down 1.93% on the session, at $3,426. Treasuries fell along the curve, pushing the 10-year yield back up to 0.77%. The dollar weakened against its peers. The pound has jumped quite a bit since August, likely due to optimism regarding a more accommodating Brexit deal. Interestingly, the Hong Kong dollar is also strong, bolstered by a high demand due to the ongoing and soon-to-come IPO’s. Gold is hanging tight, hovering around $1,900.

In the crypto space, we’re not staying in place — rather, we’re moving up. BTC is up 2.1%, currently at $11,750. Looking at the derivatives space, it’s interesting to see that over the past months the implied volatility has been softening, led by low realized volatility. Skew remains negative as traders prep for upside volatility risk. Most activity in the options market seems to be focused on longer dated upper strikes (18K and 20K), while hedging and short-dated gamma plays are less in focus.

Also, it’s worth noting we’ve hit an all-time high in BTC mining difficulty.

Look at the alts move… ETH is whipsawed 3.3% but is closing with muted gains. LINK followed, closing flat. BCH — same. LTC, XMR, and ADA showed some strength, ending the session 1% up. However, two coins showed more strength: XLM and DASH, up 7% and 11%, respectively.

Away from price-action, it was interesting to see that Binance Jersey shut down its operations (less than two years after launch) due to low demand and activity.

We also read a report on the Fed saying it is open to collaborating with the private sector on a possible digital US dollar — but reiterating that the central bank has not committed to actually launching one.