Global stocks paused at all-time highs as investors assessed renewed optimism over U.S. stimulus talks and the prospect of more vaccine approvals. Treasury yields steadied and the dollar remained near a more than two-year low.
Shares edged up in Asia, with Hong Kong stocks outperforming, while European and U.S. equity futures fluctuated after the S&P 500 closed at another record. House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer called for immediate talks and said a bipartisan $908 billion aid proposal should be the foundation for negotiations. The U.K. approved the Covid vaccine from Pfizer Inc. and BioNTech SE.
Elsewhere, Australia’s 10-year yield climbed through 1%. Oil edged lower. The pound clawed back some of Wednesday’s losses, which were sparked by the European Union’s chief Brexit negotiator Michel Barnier reportedly telling envoys the outcome of trade-deal talks is still too close to call.
After vaccine breakthroughs fueled record monthly gains for global stocks, investors are turning some of their attention to bonds. One of the year’s biggest spikes in Treasury yields has spurred speculation about the potential impact of rising rates on stocks and corporate debt.
The chief strategist at BNY Mellon Investment Management Alicia Levine, said on Bloomberg TV. “The message here really is that better days are ahead and that dips and consolidations are eminently buyable”. She added, “The market has almost immediately priced in a better-than-expected 2021, particularly in the second half and that’s what we are seeing here, and on the yield curve as well,” Still, the pandemic continues to rage. The U.S. saw the deadliest day for Covid-19 fatalities, and Los Angeles ordered residents to stay home and told businesses that require in-person work to cease operations.
Meanwhile, Federal Reserve Chair Jerome Powell indicated yesterday, that there was no rift between the central bank and Treasury Secretary Steven Mnuchin over the sunsetting of emergency lending programs. The U.S. House cleared legislation that would impose restrictions on Chinese companies listed on U.S. exchanges.