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Risk Appetite Back as Weekend's Worst-Case Scenarios Averted

Risk Appetite Back as Weekend's Worst-Case Scenarios Averted

(Bloomberg) -- It could have been worse.

That’s the mantra for markets Monday as investors embrace risk with Hurricane Irma’s trail of destruction looking less costly than initially feared and North Korea electing to celebrate its government’s 69th anniversary with fireworks rather than missiles.

If the S&P 500 Index holds its early gains, it’ll close at a record high. Meanwhile, the Dow Jones Industrial Average has returned above 22,000.

Risk Appetite Back as Weekend's Worst-Case Scenarios Averted

In Treasuries, 2 percent will have to wait. Ten-year yields are trading more than 10 basis points above that important psychological threshold, on track for their biggest one-day jump since late July.

Risk Appetite Back as Weekend's Worst-Case Scenarios Averted

The Bloomberg Dollar Spot Index is poised to snap a seven-session losing streak, coming off its lowest level since the start of 2015, while safe-haven currencies like the Japanese yen and Swiss franc came under pressure.

Risk Appetite Back as Weekend's Worst-Case Scenarios Averted

Corporates jumped on this attractive financing window to launch at least $16 billion in new bond deals on Monday, including issuances from Brookfield, Hewlett Packard and Credit Suisse among the investment grade names, while Cheniere Energy, Southwestern Energy and Wynn Macau extended a spree in junk bond sales.

Risk Appetite Back as Weekend's Worst-Case Scenarios Averted

Gold, among the prime beneficiaries of geopolitical tension, is getting whacked, falling more than 1 percent, its biggest decline in more than two months.

Risk Appetite Back as Weekend's Worst-Case Scenarios Averted

In oil markets, the price difference between Brent and WTI -- which blew out to its widest since 2015 as Irma approached -- is also in the midst of a tentative bounce-back.

Risk Appetite Back as Weekend's Worst-Case Scenarios Averted

For an illustration of how Irma’s destruction was less than forecast, have a look at orange juice markets. Fresh off the biggest weekly rally since October 2015, they faded quickly Monday. The storm’s swerve to Florida’s western coast may have been enough to save the crop from catastrophic damage. Sugar may have escaped the worst, too, with areas around Lake Okeechobee getting (only!) 7 to 15 inches (18 to 38 cm) of rain.

Risk Appetite Back as Weekend's Worst-Case Scenarios Averted

--With assistance from Simon Casey Tina Davis and James Crombie

To contact the reporter on this story: Luke Kawa in New York at lkawa@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn, Eric J. Weiner