Oil Rose But Gold Plummet As Wall Street Now Expecting Split Congress

In the expectation of an anti-Covid vaccine, oil prices soared on Monday as the December contract for a barrel of U.S. light crude (WTI) climbed 8.5 percent to $40.29 on the Nymex, propelled back above $40, while the January delivery contract for Brent jumped 7.5 percent to $42.40.

Wall Street has now been predicting a split Congress, where Democrats maintain control of the House of Representatives, but it is predicted that Republicans will remain in control of the Senate, which could restrict the ability of Biden to reform.

Michael Strobaek, head of global investment at Credit Suisse, said in a note released on Friday that the possible division of Congress means the Biden administration is unlikely to be able to initiate the big policy changes envisaged, such as tax increases.

The management company Edmond de Rothschild AM (EDRAM) also believes that we are heading for cohabitation, with Biden’s near victory, and the Republican Senate, which, financial markets especially appreciate in view of the Trump contesting the election. EDRAM continued that the absence of a Democratic majority in the Senate reduces the possibility of tighter control (positive for the technology and health sectors).

In addition to rising oil prices, the return of risk appetite on the other end has plummeted gold, which in recent weeks has been taking advantage of the uncertainties. For the Comex December futures contract, Gold dropped 5 percent to $1,854.40, the highest one-day decline in more than seven years.

In the government bond market, the 10-year T-Bond yield increased sharply to 0.93 percent (up 11 basis points) in the face of a return to risk appetite and the possibility of a resumption of growth in 2021. For the dollar index, which tests its evolution against a basket of 6 currencies (euro, pound sterling, yen, Swiss franc, Canadian dollar), the dollar increased 0.7 percent to 92.86 points.