Macro-Themes to Consider This Summer

Summer trading is ahead of us, and many investors and traders adjust their expectations accordingly. During the summer months, the trading activity typically declines as traders and investors adjust their positions.

This time it may be different. The coronavirus pandemic changed the way economies function and, after the lockdown in most of the developed and developing world, the pickup in economic activity may be responsible for an increase in volatility.

One thing is for sure – the S&P500 and the Google trend for COVID-19 experienced a strong, direct correlation in the last months, showing the importance of the pandemic evolution to investors.

Besides the coronavirus health crisis, a couple of things are worth monitoring this summer. One is the upcoming US presidential election.

Although it is only in November, investors usually position their portfolios much earlier. Trump’s reelection is likely to see a continuation of its trade policies, while a Biden victory is likely to start a new chapter in the US and its relations with the rest of the world. With no improvements on the pandemic front, the US election is likely to steal the thunder for investors moving forward.

Another major macroeconomic theme to watch is the European fiscal and economic integration. The recent joint debt issuing represents the start of a new Europe, one that acts as a single state and finances itself from the international financial markets. If the European Recovery Fund is a success, it represents a huge milestone for the old continent, a further step towards a united Europe.

For the currency market, the EURUSD pair reflects the macro imbalances on both sides of the Atlantic. It is currently struggling at 1.13, which acts as a tough resistance moving forward. It is the same level of resistance that held four years ago after Trump got elected and a pivotal level for the summer ahead.

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