© Reuters. A man wearing a face mask passes through a screen that displays a graph showing the average participation of recent Nikkei outside a brokerage house, amid the outbreak of coronavirus disease (COVID-19) in Tokyo
By Hideyuki Sano
TOKYO (Reuters) – Global stock prices rose as U.S. bond yields hovered near a 13-month peak on Monday, with investors betting that US economic growth will accelerate after the stimulus project for $ 1.9 trillion that President Joe Biden signed last week.
A launch of COVID-19 vaccines in the United States and some other countries has fueled a bullish mood on risky assets, even as investors become wary of the central bank’s major policy meetings later in the week, including the Federal Reserve from the USA.
“The United States is vaccinating more than three million people a day, with President Biden saying that all adults will be able to get the vaccine by May 1. This may soon achieve herd immunity and economic normalization,” said Norihiro Fujito, head of investment strategist at Mitsubishi UFJ (NYSE 🙂 Morgan Stanley (NYSE 🙂 Titles.
US futures rose 0.2% at the start of Asian trading, trading just below a record high reached last week, while they rose 0.3%.
Mainland China shares doubled the downward trend, despite the data showing an acceleration in industrial production and an increase in retail sales.
MSCI’s broader Asia-Pacific stock index outside Japan rose 0.2%, with Hong Kong leading the way.
“Most market participants and policy makers were surprised at the speed of the recovery. In our estimates, the US economy will reach pre-COVID-19 production levels in the current quarter,” said Chetan Ahya, global head of economics , on a note.
“Fiscal policy is doing much more than filling the gap in production. Transfers to families have already surpassed the income lost in the recession. As the reopening gains pace, the job market is ready for a strong recovery.”
The US House of Representatives gave final approval last week to the COVID-19 relief bill, giving Biden his first major victory in office.
Some investors speculate that part of the $ 1,400 direct payments to households could reach the stock markets, as appeared to be the case with similar direct payments made last year for coronavirus relief.
Investors also suspect that the $ 1.9 trillion package, which amounts to more than 8% of the country’s GDP, may fuel inflation – to the detriment of bonds, especially when their yields are so low.
Rising inflation expectations could prompt the Federal Reserve to signal that it will start raising rates sooner, when it announces its latest economic projections at the end of the Federal Open Market Committee (FOMC) meeting on Wednesday.
“Following fiscal stimulus packages is inevitable
that the Fed’s GDP forecasts will be revised upwards, and some FOMC members may think that rates will have to rise earlier than they anticipated last December, “wrote ANZ economists.
Yield on 10-year US Treasury bonds stood at 1.628%, having risen to 1.642% on Friday, an increase last seen in February last year.
In addition to the US economic optimism and rising expectations of debt supply after the stimulus, uncertainties about whether the Fed will extend an emergency regulatory easing in the so-called “supplementary leverage index” (SLR) increased the feeling of discomfort.
Higher yields on US bonds resulted in an appreciation of the dollar against other major currencies.
The euro fell to $ 1.1947 from last week’s high of $ 1.1990, while the dollar held steady at 109.12 yen, close to the nine-month high of 109.235 on Tuesday.
The pound sterling fell 0.25% to $ 1.3934.
It fell briefly to $ 58,742, against a record of $ 61,781 set on Saturday after Reuters reported that a senior Indian government official said Delhi will propose a law that prohibits cryptocurrencies, fining anyone in the country who negotiates or even holds such cryptocurrencies. digital assets.
Oil prices were supported by cuts in production by major oil producers and optimism about a recovery in demand as the global economy recovers from the pandemic-induced recession.
futures traded at $ 66.23 a barrel, up 0.9% on the day.