It can’t be said Wall Street traders welcomed the announcement of Kevin Warsh as President Donald Trump’s nomination to succeed Federal Reserve Chair Jerome Powell.
They didn’t exactly race to exits, nor did they head to the fridge to uncork the champagne — they merely sold some stock, took some profits and headed off for the weekend.
The S&P 500 and Dow slipped 0.4%, the Nasdaq continued to lose favour, down 1.3%.
Precious metals traders, on the other hand, ran around like their hair was on fire.
Gold had its most savage sell-off since 1983, down around 10%, gold futures suffered worse.
Spot silver was down almost 30% (the largest daily drop on record) and platinum fell 19%.
Actually, it was probably more calculating than panic, as many in the game were happy to trouser some hefty recent profits.
Despite the retreat, gold gained 13% over the month and silver was up 17%.
The ASX, with a significant gold sector, looks like falling quite sharply this morning.
ASX futures trading closed on Saturday morning, pointing to a 0.7% fall on opening.
While there are many currents swirling around markets at the moment, the announcement Mr Warsh’s nomination, with his reputation for being an inflation hawk, seemed to be the trigger for Friday’s events.
However, it is doubtful he would have got the nod from Mr Trump if his big plan was to immediately start jacking up rates.
IG’s Tony Sycamore says Mr Warsh may not be as “hawkish” as the pre-publicity suggests.
“Keven Warsh brings a degree of credibility and removes one layer of uncertainty currently plaguing markets,” Mr Sycamore said.
“It remains to be seen how his traditionally hawkish leanings—which included pushing back against past Fed balance sheet expansion and advocating for higher interest rates due to inflation concerns — have evolved.
“More recently, he has shown a shift toward a more dovish stance. Consequently, he is expected to at least initially advocate for easier policy, in line with President Trump’s desired path for lower rates.”
Nonetheless, the US dollar gained (pushing the Aussie dollar back below 70 US cents), as long-dated US Treasury yields steepened a touch.
Europe markets largely ignored the US and gold action, ending the month on a strong note, up around 1%, despite a forecast of corporate earnings slipping around 4% this year.
Oil hovered around its six-month high with Brent crude slipping marginally, just under the $US70/barrel level.
Cryptos had an ugly time of it, largely because Mr Warsh is an advocate of shrinking the Fed’ s balance sheet, and they have benefitted from a lot of liquidity sloshing around the markets.
Having been on the skids lately, Bitcoin’s fall was accelerated by the liquidation of a number of highly geared positions as the price tumbled through various trigger points.
Bitcoins trading well below $US80,000, almost 40% down on its peak back in October.