What is the way forward
The US dollar is on the upswing at the moment as the strongest-ever JOLTS job openings data underscores the positive outlook on the US reopening. At the same time, the oil market and other commodities are reflecting intense worries about the potential impacts of the delta variant.
The bull case includes the covid case charts from the UK and India where recent peaks were v-shaped and retreated very quickly. The hope is that the same soon follows in the United States and that it runs through other emerging economies quickly.
The other side of that are places that have done extremely well at controlling covid and are likely to stick with a strategy of total suppression for some time: China and Australia.
Both sides are increasingly fighting a futile battle and will ultimately need to shift towards a model of vaccination, moderate suppression and acceptance. That is going to be a tough transition, particularly in China where leaders have proudly touted suppression strategies as a feature of their surveillance economy.
The bullish side of the equation is economic data that's showing a robust reopening in the US despite the challenges. Healthcare systems are strained but there are no real signs that people don't want to participate in the economy. Today's JOLTS data hit a record 10 million job openings, a sign that there's work for anyone who wants it.
At the moment, it's largely leading to a market that's uneasy and can break either way quickly. We saw that today in commodity markets as China worries dominate. At the same time, Treasury yields are ticking back higher as the demand for safety fades.
I believe that delta cases are the key spot to watch at the moment. US reporting is always light on Mondays because of weekend effects but we've seen around 40K cases in the past two days in a sharp drop from 7-month highs near 150K late last week.
