LONDON (Reuters) – Bond yields rose and the dollar fell on Wednesday in the wake of a stronger stimulus as Democrats take control of the US Senate after Georgia’s by-elections, as oil peaked 11 months after Saudi Arabia agreed to reduce production more than expected.
Democratic challenger Raphael Warnock defeated current Republican Kelly Loeffler in one of two state Senate races, TV and Edison Research. Democratic challenger Jon Ossoff had a weak advantage over Republican David Perdue in the other, with 98 percent of the vote counted, according to Edison. here
Together with a narrow majority for Democrats in the House of Representatives, a “blue broom” of Congress could introduce a greater fiscal stimulus and pave the way for President-elect Joe Biden to promote greater corporate regulation and higher taxes. .
“A democratic-led government is expected to provide more incentives, essentially spending more, to help alleviate the virus crisis,” Paul Sandhu, head of multi-active quantum solutions, APAC, told BNP Paribas Asset Management from Hong Kong. “That means there will be a weaker dollar.”
Analysts generally assume that the Democratic-controlled Senate would be positive for global economic growth and therefore the most risky assets, but negative for bonds and the dollar, assuming the US budget and trade deficits increase and more.
The U.S. Treasury’s 10-year yield rose more than 1 percent for the first time since March, based on higher government loan expectations in a 50-50 Senate split with Vice President-elect Kamala Harris as Speaker of the upper house. becoming equality breaker.
For a 10-year US Treasury yield chart over 1%:
“History tells us that it is much easier to do things when a party controls everything, because Democrats and Republicans have had difficulty cooperating for at least 30 years,” Danske analysts said in a statement.
German bond yields followed the treasuries to their highest level in almost five weeks. [GVD/EUR]
The euro rose to $ 1.2344, a level last seen in April 2018, while the yen hit a 10-month high of $ 102.57. The dollar reached its lowest level in almost six years against the Swiss franc.
Bitcoin rose more than 5% to a record $ 35,879.
Global stocks gained 0.1%, returning to the most recent record highs, and European equities rose 0.08%.
But futures for the US benchmark S&P 500 fell 0.7%, while Nasdaq futures fell 2.1% due to fears that Democrats could pursue stricter regulations on large technology firms.
Other industries, such as banking, oil and gas and healthcare, could be subject to more scrutiny, while the infrastructure and alternative energy sectors could benefit.
OIL CULIN
Oil prices rose to their highest level since February 2020, after Saudi Arabia agreed to cut production more than expected in a meeting with allied producers, while industry figures showed that US crude oil stocks low last week. [O/R]
US futures rose to a high of $ 50.24 a barrel before cutting gains to 4.9% on Tuesday.
The international benchmark index for Brent crude futures rose 0.54% to $ 53.89.
In Asia, the Japanese Nikkei fell 0.4%, while the MSCI Asia-Pacific index, with the exception of Japan, erased previous gains to trade flat.
Shares in Shanghai widened growth, with the CSI300 rising 0.7% to its best levels in 2008, eliminating the chaotic stock market in New York over how it will treat Chinese companies to comply with Trump administration sanctions. .
The exchange took a second sharp turn, saying it was reconsidering its plan to allow three Chinese telecommunications giants to remain listed.
Additional reporting by Hideyuki Sano in Tokyo, Scott Murdoch in Hong Kong and Tom Westbrook in Singapore; Editing by Sam Holmes, Kenneth Maxwell and Alex Richardson