© Reuters. PHILO PHOTO: the screen shows the Nikkei stock averages and stock indices outside a Tokyo broker
LONDON (Reuters) – European equities rose after a shaky start and the dollar rose on Wednesday as the 10-month low fell, helped by policymakers pushing back against the talks of the Fed reducing its support.
After Asian equities had moderate gains, European equities opened lower and then rose slightly, with the pan-European up 0.2% on the day at 0918 GMT.
The MSCI World Equities Index, which tracks stocks in 49 countries, rose 0.2%, falling to overall highs, and MSCI’s largest European index rose by a similar amount.
China recorded its largest daily jump in COVID-19 cases in more than five months, despite the fact that four cities were in the lock, and the Dutch government said it would extend the closure measures on Tuesday.
Investors are keeping a close eye on the declining debate – that is, the Fed’s possible easing of monetary stimulus.
Several Federal Reserve policy makers, including Loretta Mester, Esther George, James Bullard and Eric Rosengren, have pushed back the Fed’s idea of reducing its asset purchases soon.
These remarks, coupled with a well-received 10-year treasury auction, sent the U.S. 10-year yield down again, away from the 10-month high of 1.187% reached in the previous session.
By 0919 GMT, the standard yield was 1.1189%.
The yield curve, which reached the strongest since May 2017 over expectations for major fiscal stimulus under a new Democratic government, narrowed slightly to 96.8 basis points.
“We believe that the potential for fiscal stimulus, coupled with a normalization of economic activity as the explosion of vaccines increases, justifies a slightly higher yield from the U.S. Treasury,” UBS strategists wrote in a note to clients.
“In recognition of this, we have increased our 10- and 30-year US Treasury yields by 0.1 percentage points this year to 1.0% and 1.7%, respectively, by the end of December,” they said, adding that they did not run-up to yields goes much further than that because central banks remain accommodating and the Fed has indicated a tolerance for higher inflation.
In light of the recent yield jump, the US inflation data of December 1330 GMT will be closely monitored.
The US dollar recently broke its downward trend with a three-day winning streak, and began to fall again on Tuesday. It was steady overnight, but began trading in London early on Wednesday, questioning whether the refusal was over.
By 0920 GMT, it was up 0.1% at 90,136 against a basket of currencies.
With at least five Republicans joining Democrats to accuse President Donald Trump of storming the U.S. Capitol, Marshall Gittler, head of investment research at BDSwiss Group, said that to prevent Trump from electing him in the future, the “Trump will permanently remove ‘premium’ from the dollar and further weaken the currency.”
In Europe, government bond yields have fallen. Italian bonds, which were sold on Tuesday due to political uncertainty, lagged behind Germany.
Data for industrial production in the eurozone for November should be by 1000 GMT.
Against the dollar, the euro was about 0.2% lower at $ 1.21875 at 0920 GMT. Risky currencies such as the Australian and New Zealand dollars also fell as the US dollar rose higher.
rose slightly, but at $ 34,999 it was still about 17% lower than the daily high of $ 42,000 it reached on Friday last week.
Oil prices rose, and rose for the seventh consecutive day, while the U.S. West Texas Intermediate and both traded at their highest since February, after operating data showed a larger-than-expected decline in stocks and investors’ impact on the shook pandemic.