Renewed stimulus hopes added to optimism over progress on coronavirus vaccines may have led to the biggest spike seen in a year with the 10-year treasury yield. As the 10-year Treasury yields are on the march toward 1% again, investors have been seen contemplating what sort of ripple effect this might have on other markets. The S&P 500 and Nasdaq composite also reached new heights yesterday gaining 1.1% and 1.3% to close at 3,662.45 and 12,355.11 respectively, beating their record highs set on Friday with big techs and banks driving a big part of that rally.
Markets in Asia did not share in the same optimism with their counterparts on Wall Street as markets in Asia were mixed on Wednesday. Investors in Asia may seem to have adopted a “wait & see” approach with so many failed attempts taking place before now on forging an agreement on a new stimulus plan as the U.S. endures fresh waves of coronavirus infections and precautions. Australia did report its economy expanded 3.3% in the July-September quarter as the country recovered from pandemic lockdowns which lifts the country out of recession, although in annual terms the economy contracted 3.8% from a year earlier, Hong Kong’s Hang Seng HIS fell slightly, while the Nikkei 225 NIK in Tokyo edged up 0.2%.
Federal Reserve Chairman Jerome Powell did caution lawmakers during his testimony at a hearing before the Senate Banking Committee yesterday that the U.S economy remains in a damaged and uncertain state. His is also due to testify again before the Congress on Wednesday.
European stocks seem to have opened lower Wednesday, consolidating after its recent strong gains posted on Tuesday. The major averages at the close of trading Tuesday saw the DAX futures contract in Germany gaining 0.7%, the FTSE 100 closing up 1.9% and the CAC 40 up by 1.1%. There might be a particular focus on the U.K. market, after British regulators said they had approved the Pfizer/BioNTech vaccine for use and would begin distribution next week.
A surprise increase in U.S crude inventories led to oil prices falling as industry data from the American Petroleum Institute late Tuesday showed U.S. crude inventories rose by 4.1 million barrels last week, compared with expectations for a draw of 2.3 million barrels. U.S. crude futures traded 0.7% lower at $44.25/bbl, while the international benchmark Brent contract fell 0.5% to $47.19/bbl. Also, there is the uncertainty over whether a group of leading producers will maintain current supply levels going into the new year. OPEC+, had postponed to Thursday a decision over the level of next year’s supply, raising concerns that pressure is growing within the group to raise output despite the current weak overall demand.
According to EPFR and CITI, Ghana bonds were the third best performing in emerging markets last week, returning 2.5% which shows an extended recovery from March following the disruptions caused by the pandemic. Ghana will be holding their presidential and parliamentary elections on December 7th. Given the reservations usually had by investors when it comes to political risk, that has and not deterred investors from mopping up bonds issued by the government given its rising debt pile knowing that the next government will hopefully make more moves in repairing its public finances in the potential new government era.