Global equities reached another record and Treasury yields soared after Janet Yellen pushed for rapid stimulus in the U.S. and coronavirus infections declined worldwide. The dollar stabilized after Friday’s decline.
The S&P 500 and European futures advanced after the American indicator broke a record on Friday. Japan’s Topix index was moving towards its biggest close since 1991 amid a report that authorities are considering an early end to the state of emergency in 10 Japanese prefectures.
Treasury Secretary Yellen said on Sunday talk shows that the US could return to full employment in 2022 if it approved a robust enough aid package. Ten-year Treasury yields rose to 1.2%. The pace of US inflation implicit in the bond market has reached its highest level since 2014, with the recovery in crude oil prices.
Investors are taking comfort in the continued launch of vaccines and data that suggest a downward trend in infections in countries like the US and Germany. An indicator of Citigroup Inc.’s global risk aversion has fallen to its lowest level since the pandemic began to cloud markets last year.
While the weaker-than-expected job data on Friday reinforced the fragility of the recovery as the pandemic continues, they also highlighted the case for new stimuli. A larger American aid package risks boosting inflation and overheating asset prices, some warned. The pace of Inflation in the USA over a 10-year horizon implicit in the bond market has reached its highest level since 2014, with investors betting on the economic recovery.
“It seems that global markets have now become addicted to stimuli and that the biggest risk to prospects – and the potential trigger for a correction in risk asset valuations – would be central banks slowing down,” said Simon Ballard, chief economist First Abu Dhabi Bank Pjsc.
Here are some important events to come:
- The earnings season continues with companies like Honda Motor, SoftBank Group, Cisco Systems, Commonwealth Bank of Australia, Societe Generale, Commerzbank and L’Oreal.
- The EIA crude oil inventory report arrives on Wednesday.
- Sweden will set monetary policy on Wednesday.
- Federal Reserve Chairman Jerome Powell will speak at a webinar on Wednesday.
- The US consumer price index arrives Wednesday.
- Lunar New Year holidays begin in Asian countries, with China interrupting for a week.
- The Bank of Russia’s policy decision arrives Friday.
These are the main changes in the markets
Stocks
- The S&P 500 futures increased 0.5% from 12:15 in Tokyo. The indicator rose 0.4% on Friday.
- Japan’s Topix index rose 1.7%.
- The Hong Kong Hang Seng index advanced 1.1%.
- South Korea’s Kospi index has changed little.
- Australia’s S & P / ASX 200 index rose 0.8%.
- The Shanghai Composite Index rose 1.2%.
- Euro Stoxx 50 futures were up 1%.
Coins
- The Bloomberg Dollar Spot Index has changed little.
- The yen was at 105.44 per dollar, down 0.1%.
- The offshore yuan changed little by 6.4531 per dollar.
- The euro bought $ 1.2038, down 0.1%.
Titles
- Yield on 10-year Treasury bonds increased to 1.18%.
- Australia’s 10-year yield advanced six basis points to 1.26%.
Commodities
- West Texas Intermediate crude gained 0.9% to $ 57.34 a barrel.
- Gold has barely changed at $ 1,811.71 an ounce.
– With the help of Sophie Caronello, Joanna Ossinger and Cormac Mullen