LONDON (Reuters) – European stocks rose after a shaky start, and the dollar rose on Wednesday as the fall fell from 10-month highs, aided by decision-makers pushing back against talk of the Fed stepping up its support.
After Asian equities experienced modest gains, European equities opened lower but rose slightly with the pan-European rise of 0.2% on the day at. 091
MSCI’s world stock index, which tracks stocks in 49 countries, rose 0.2% and rose back to ever-higher levels, and MSCI’s main European index rose by a similar amount.
China recorded its biggest daily jump in COVID-19 cases in more than five months, despite four cities being on lockdown, and the Dutch government said it would extend lockdown measures on Tuesday.
Investors are closely following the discussion on tightening – that is, the Fed’s possible easing of monetary stimulus.
Several Federal Reserve decision-makers, including Loretta Mester, Esther George, James Bullard and Eric Rosengren, pushed back on the idea that the Fed would tighten its asset purchases soon.
These comments, along with a well-received 10-year government bond auction, pushed the US 10-year yield back, away from the 10-month high of 1.187% achieved in the previous session.
At 0919 GMT, the benchmark yield was 1.1189%.
The yield curve, which had reached the steepest since May 2017 on expectations of a major fiscal stimulus under a new democratic administration, narrowed slightly to 96.8 basis points.
“We believe that the potential for fiscal stimulus, along with a normalization of economic activity as vaccine prevalence increases, justifies slightly higher US government yields,” UBS strategists wrote in a note to clients.
“In recognition of this, we have raised our 10- and 30-year US government returns by 0.1 percentage points this year to 1.0% and 1.7%, respectively, by the end of December,” they said, adding that they does not expect the rise in interest rates to go much further than that because central banks remain accommodating and the Fed has signaled a tolerance for higher inflation.
Based on the recent interest rate jump, inflation data in the US, which is expected at 1330 GMT, be closely monitored.
The U.S. dollar recently broke its downward trend with a three-day winning streak, after which it continued to fall on Tuesday. It was stable overnight but was picked up in early London trading on Wednesday, questioning whether its rejection was over.
Kl. 0920 GMT it rose 0.1% at 90.136 relative to a basket of currencies.
With at least five Republicans joining the Democrats pushing to accuse President Donald Trump of the storm of the U.S. Capitol, Marshall Gittler, head of investment research at the BDSwiss Group, said that preventing Trump from running in elections in the future would “permanently remove premiums” from the dollar and allow the currency to weaken further. “
In Europe, government bond yields fell. Italian bonds, which sold out on Tuesday due to political uncertainty, hung behind Germany.
The Eurozone’s industrial production data for November are due at 1000 GMT.
In relation to the dollar, the euro fell by approx. 0.2% to $ 1.21875 at 0920 GMT. Riskier currencies such as the Australian and New Zealand dollars also fell as the US dollar rose higher.
rose slightly, but at $ 34,999 it was still about 17% lower than the highest level of $ 42,000 it reached on Friday last week.
Oil prices rose and rose for the seventh day in a row, with the US West Texas Intermediate, and both traded at their highest level since February, after industry data showed a larger-than-expected decline in inventories and investors pulled away from the pandemic’s impact.