Overnight developments from the Korean peninsula were clearly at the center of today's financial markets trading. And is so often the case when things get dicey in some region of the world, investors shed equities, commodities, and other 'risk-on' assets in lieu of the perceived safety of the U.S. Dollar and Treasury securities. Interestingly, though, gold bucked the lower overall trend in metal prices and shot up nearly 0.75% as investors continued to look to the yellow metal as a source of safety. This resilience is made all the more impressive when you consider the scale of the rally in the DXY on the day. But, as I mentioned in my comments last night, these moves, both on the upside as well as the down, are still largely meaningless given the limited participation leading up to Thursday's Thanksgiving holiday. To be sure, continued frictions in Korea are something that could end up pushing equity and commodity markets lower in the coming weeks, but, as of now, this appears to be a singular event rather than the beginning of a larger conflict. On the other hand, though, this is yet another development that reinforces the notion that the markets will be hard pressed to move meaningfully higher for the foreseeable future.
Looking to tomorrow, volumes should be VERY light as the few traders who will make it to their offices will leave early. Given the sharply lower trade in equities today, I wouldn't be surprised to see a small relief rally materialize into a larger spike amidst the lighter volumes. This, of course, assumes no negative developments out of Korea. If something does develop, all bets are off.
Until tomorrow.....
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