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US Air Strike Sparks Risk Aversion | US Manufacturing, FOMC Minutes Headline Calendar

Published January 3, 2020
  • Tensions between the US and Iran escalated to another level today as news broke of a US airstrike in Iraq that killed Qassem Soleimani, who many regard as the most powerful figure in Iran.  Iran has vowed severe retaliation for the attack, and fears of full-blown military conflict have sent shock-waves throughout the world.  Markets have reacted quite predictably on the news, sending bond yields, gold, and other haven assets higher.  Oil prices are also up sharply as markets fear the potential impact on Middle East oil supplies if the conflict escalates further.
  • Today’s economic calendar is headlined by US manufacturing and FOMC minutes.  Markets are expecting US ISM Manufacturing to rise but remain in contraction territory for the fifth consecutive month.  The FOMC minutes aren’t expected to be too eventful given the wait-and-see policy that has been adopted, and reaction may be especially muted given the geopolitical headlines overshadowing the market.

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