Stocks close near highs as bond yields fall

A little-noticed move by Senator Elizabeth MacDonough in May said Democrats can only use “reconciliation” once a fiscal year to get around legislation that requires 60 votes. Democrats adopted Biden’s $ 1.9 trillion COVID-19 relief package in March through reconciliation.

Democratic budget packages in Congress are shrinking rapidly, resulting in a bottom line that inflationary pressures are expected to ease, said Sebastien Galy, senior macro-strategist at Nordea Asset Management.

The benchmark 10-year US Treasury yield fell 3.9 basis points to 1.4891%, from 1.528% on Tuesday night.

Yields plunged as traders were partly forced to unwind short positions in Treasuries, said Joe LaVorgna, chief economist of the Americas at Natixis.

“More importantly, the economy is at its peak of growth and much of what the administration (Biden) wants to do in terms of fiscal stimulus may not be met due to the parliamentary decision,” LaVorgna said. .

The MSCI All Country World Index, a US-centric benchmark for global stock markets, closed 0.2% lower at 715.57, less than 3 points from its record high on Tuesday.

On Wall Street, the S&P 500 moved closer to 1 point from its all-time high set in May as major tech rallied along with health care stocks.

The Dow Jones Industrial Average slipped 0.44%, the S&P 500 lost 0.18% and the Nasdaq Composite fell 0.09%, as growth stocks closed slightly higher and value stocks dumped fell.

The market is on hold because everyone wants to trade “memes stocks,” which are not among the major indices, said Dennis Dick, a trader who owns Bright Trading LLC.

“Why is someone going to trade Apple, trying to make 10% a year, when they can make 10% in five minutes in GameStop?” Dick said.

Attention remained focused on the release of US consumer price data on Thursday and a European Central Bank meeting that could reveal how soon policymakers will start withdrawing support for the European economy. as the COVID-19 crisis eases.

The pan-regional STOXX Europe 600 index rose 0.1% to a new closing high, but far from Tuesday’s all-time high. The UK FTSE fell 0.2% as UK listed miners slid under pressure from lower base metal prices.

Air France KLM, Lufthansa and IAG, owner of British Airways, soared by about 3% each after the US Centers for Disease Control and Prevention (CDC) said it was relaxing travel recommendations in 110 countries and territories.

Overnight in Asia, the MSCI’s largest Asia-Pacific stock index excluding Japan closed 0.4% lower, as did the Japanese Nikkei average.

The 10-year German Bund yield, which is closely correlated to US Treasuries, extended Tuesday’s decline to -0.247%, the lowest since late April, as investors continued to anticipate an accommodative outcome to the ECB policy meeting Thursday.

Thursday’s US consumer price data is expected to show the headline annual inflation rate climbing to 4.7%, worrying many investors who are unconvinced by the Federal Reserve’s insistence on the fact that the price increase will be transitory.


Inflation data from China showed its producer price index jumped 9.0% from a year earlier, the highest in more than 12 years, due to soaring prices. commodity prices.

However, the rise in consumer prices was weaker than expected, helping to alleviate concerns. As China’s central bank slowly cuts the pandemic-induced stimulus package, key leaders have pledged to avoid any sharp policy shift and keep borrowing costs low.

The Chinese yuan, whose rally to a three-year high last week was propelled in part by speculation that Beijing might want a stronger yuan to keep inflationary pressures under control, edged up to 6.3869 per dollar.

The dollar held on to the lower end of recent gains, with the US dollar index edging up to 90.148.

The euro climbed to $ 1.2175, while the dollar climbed to 109.61 yen.

Deutsche Bank’s currency volatility index hit its lowest level since February 2020 on Tuesday and sank further on Wednesday.

Oil prices have continued to rise amid signs of strong demand for fuel in Western economies.

Brent crude futures stabilized at $ 72.22 per barrel, while US crude futures fell 9 cents to $ 69.96 per barrel.

US gold futures were up 0.1% to $ 1,895.50 an ounce.

(Reporting by Herbert Lash; Editing by Richard Chang and Jonathan Oatis)

By Herbert Lash and Tom Arnold

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