Risk Assets Grind Higher as Markets See Limited Impact from Paris Attacks

Stocks rallied with the dollar while Treasuries and swaps traded close to unchanged as markets digested the fallout from Friday’s horrific terrorist attacks in Paris.  After getting over the initial shock, a sense of normalcy restored to the markets as investors refocused on global growth prospects and the Fed.  Data was light globally with the exception of Japanese GDP which came in weaker than expected (-0.8% vs. -0.2%e annualized QoQ).  Japan’s economy is now in a technical recession following the second consecutive quarter of contraction.  Most of the weakness in the headline number can be attributed to a drop in inventories and it is unlikely to prompt additional stimulus from the BoJ. 

Absent of any tier 1 data or scheduled Fed speakers in the US, investors focused on geopolitical developments and set up for upcoming inflation and housing data and Wednesday’s release of the October FOMC minutes.