Video: The Threat of Deeper Risk Aversion Tops 4Q Trading Themes
• Seasonally, October is the most volume and volatility intense month - a dangerous mix for a 'risk'-prone market
• On balance through 2015, monetary policy tended to carry the most influence over the financial markets
• With the sharp drop in risk trends through these past few months, sentiment will likely be a key 4Q theme
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Another swell of volatility has stalled before critical technical moves were made. Monday's broad selling pressure in risk-oriented assets pushed a number of benchmarks to the precipice; but calm this past session has left us balancing. Given the motivation for this week's abrupt start traces back to swoons in assets such as Emerging Markets, high yield and biotech shares; it seems financial headlines are still carrying more influence than sheer speculative positioning. However, accounts of the wave of capital outflows from previous favorite assets and ETFs will keep sentiment off balance and the risk of a true breakdown dangerously close. As we await the verdict on sentiment trends, the Fed's rate timing conversation will be revived with a number of key speeches scheduled (including a distinctly risk-sensitive discussion on liquidity with New York Fed President Dudley). We discuss the fundamentals, technicals and market opportunities in today's Trading video.
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