Some of the favorite trades of the week have been buying gold and bonds, and that could continue to be the trend Thursday as traders watch politics in Europe and Washington.
Earnings from , Viacom, Nvidia and are expected in one of the last big blasts of the earnings season Thursday. Airline CEOs visit the White House Thursday morning, the latest industry to speak to President Donald Trump.
"This Trump trade is getting so long in the tooth," said Nicholas Colas, chief market strategist at Convergex. "It doesn't feel like there's any motion in it. … Everybody is asking the same question – when are we going to see something actionable on taxes, infrastructure and regulation."
Stocks have basically been meandering, with the down 0.1 percent for the week. It was up 1 point Wednesday at 2,294. Even the is only up 0.3 percent for the week, but it has hit a new high. But the bond market has been active, as has gold buying. The 10-year Treasury yield Wednesday dipped to a low of 2.32 percent, its lowest level since Jan. 17. Gold was up again, and at $1,239 per ounce, futures are now up 10 percent since Dec. 15.
Strategists in both the Treasury and precious metals markets point to two factors that have driven some safe haven buying. One is worries about the fate of the euro zone with the upcoming French election and Greece debt woes, and the other is uncertainty surrounding President Donald Trump and when his growth policies will be pushed. There is also concern that the president will follow a policy path that could start trade or currency wars.
"Every new administration has its hiccups and false starts so I think everyone is giving Trump a pass, but at some point the honeymoon is over," Colas said.
There are two Fed speakers Thursday. St. Louis Fed President James Bullard speaks at 9:05 a.m. ET on the economy and policy, and Chicago Fed President Charles Evans speaks at 1:10 p.m. on economic conditions and monetary policy. There is also a 30-year bond auction at 1 p.m. ET.
Wednesday's 10-year auction was weak, and traders point to short covering as another factor driving the market. BMO Capital strategists said in a note that flows in the Treasury market were the highest in weeks, higher than the volume last Friday when the jobs report was released, as well as on the day of the Fed meeting Feb. 1. Volumes in cash terms were 130 percent of the 10-day moving average, as money poured into bonds, they said.
"It seems to be all about politics these days," said Boris Rjavinski, director rate strategy at Wells Fargo. He said the market is watching both Europe and the U.S. The concern is that Marine Le Pen's chances appear to be improving, and she would take France off the euro, threatening the future of the euro zone.
"It's a combination. U.S. politics have never really faded into the backburner with this transition to the Trump administration and all this uncertainty about fiscal stimulus and tax reform, and now the European politics are coming to the forefront. France is a big part of it, but it's also the Greek story is resurfacing again. If we had a blue sky, sunshine, perfect risk on environment, maybe Greece by itself wouldn't matter much. if there are jitters elsewhere and people are worried about France, then Greece could be an important contributing factor."
Rjavinski said next up for the bond market will be testimony from Fed Chair Janet Yellen next week, and she could determine the next direction for yields. But even after that, he said he's also interested in the minutes from the last Fed meeting, expected on Feb. 22.
"There could be the possibility of a surprise. The FOMC had put out a pretty sort of middle of the fairway dovish looking statement after the meeting but if you look, at the speeches of FOMC members delivered after the meeting, they were not consistent with the language of the statement," he said. Yellen is a more important messenger, but the minutes could give further clues about whether the Fed would consider a rate hike in March.
Gold has been attracting buyers through ETFs in recent sessions, and that could continue.
"We have several days of steady ETF purchases," said James Steel, chief commodities analyst at HSBC. "There was weakness in ETFs at the end of last year, and there was only slight gains in January. … ETFs reflect a broad spectrum of buyers so the market takes it quite positively when the they start to accumulate."
Steel said China demand appears to be picking up, but the market is fixated on other factors. "I think the gold move took its cue from the slight dip in yields and the geopolitical risk that continues to feed into the market," said Steel.
"This could all change rapidly…the market's been up fro along time without any profit taking," he said.
Other earnings are expected from Beazer Homes, Regeneron, CVS Health, Nissan, Occidental Petroleum, Cummins, KKR, Norsk Hydro, and Total, before the bell. Activision Blizzard, Expedia, Mohawk, Western Union, Pandora Media, Energen, Yelp, Zynga and VeriSign report after the close.