LONDON (Reuters) – Bond yields have risen and the dollar fell on Wednesday on the prospect of more stimulus as Democrats take control of the US Senate following a run-off election in Georgia, while oil peaks at 11 months after Saudi Arabia agreed, production was reduced more than expected.
Democratic challenger Raphael Warnock beat Republican incumbent Kelly Loeffler in one of two state Senate races in the state, TV networks and Edison Research are predicted. Democratic challenger Jon Ossoff has a slim lead over Republican David Perdue in the other, counting 98% of the vote, according to Edison. here
Together with a narrow majority for the Democrats in the House of Representatives, a ‘blue whip’ from Congress could usher in greater fiscal stimulus and pave the way for President-elect Joe Biden to push for greater corporate regulation and higher taxes.
“A democratic government is expected to add more stimulus, in fact spend more to help alleviate the virus crisis,” said Paul Sandhu, head of multibate solutions, APAC, at BNP Paribas Asset Management in Hong Kong. “That means there will be a weaker dollar.”
Analysts usually assume that a democratically controlled Senate will be positive for economic growth globally and therefore for the more risky assets, but negative for bonds and the dollar, assuming that the US budget and trade deficits will swell even further.
Ten-year U.S. treasury yields have risen above 1% for the first time since March due to expectations of larger government loans under a 50-50-split Senate and Vice President-elect Kamala Harris, as president of the upper chamber, the band would become. breaker.
For a graph of the US ten-year treasury yield of more than 1%:
“History tells us that it’s much easier to get things done if one party controls everything, because Democrats and Republicans have had problems working together for at least 30 years,” Danske analysts said in a note.
The yields of the German bonds followed Treasury, which reached its highest in almost five weeks. [GVD/EUR]
The euro rose to $ 1.2344, a level last seen in April 2018, while the yen hit a ten-month high of 102.57 to the dollar. The dollar was the lowest in almost six years against the Swiss franc.
Bitcoin rose more than 5% to a record high of $ 35,879.
World equities rose 0.1%, falling to recent highs, while European equities rose 0.08%.
But the futures contract for the US benchmark S&P 500 fell by 0.7%, while Nasdaq futures fell by 2.1%, for fear that the Democrats could comply with stricter regulations on large technology companies.
Other industries, such as banking, oil and gas and healthcare, could be more heavily explored, while infrastructure and alternative energy sectors could benefit.
OIL CLIMB
Oil prices have risen to their highest level since February 2020 after Saudi Arabia agreed in a meeting with related producers to reduce production more than expected, while operating figures show that US crude stocks fell last week. [O/R]
US crude futures rose to a high of $ 50.24 a barrel before making a profit, climbing 4.9% on Tuesday.
The international benchmark for Brent crude futures rose 0.54% to $ 53.89.
In Asia, the Japanese Nikkei fell 0.4%, while the Asian Pacific MSCI index, excluding Japan, wiped out earlier gains to trade.
Shares in Shanghai made extensive gains, with the CSI300 index rising 0.7% and reaching its best levels since 2008.
The exchange took a second sudden turn, saying it was reconsidering its plan to keep three Chinese telecommunications giants.
Additional reporting by Hideyuki Sano in Tokyo, Scott Murdoch in Hong Kong and Tom Westbrook in Singapore; Edited by Sam Holmes, Kenneth Maxwell and Alex Richardson