LONDON (Reuters) – Bond yields rose and the dollar fell on Wednesday ahead of further stimulus if Democrats take control of the U.S. Senate after the Georgia election, while oil peaked. ’11 months after Saudi Arabia agreed to reduce production more than expected.
Challenging Democrat Raphael Warnock defeated current Republican Rep. Kelly Loeffler in one of two races in the state Senate, television networks and Edison Research projected. Challenging Democrat Jon Ossoff maintained a narrow lead over Republican David Perdue in the other, with 98% of the vote counted, according to Edison. here
Along with a narrow majority for Democrats in the House of Representatives, a “blue sweep” of Congress could open up a greater fiscal stimulus and pave the way for President-elect Joe Biden to push for greater corporate regulation and higher taxes.
“A Democratic-led government is expected to add more stimulus, essentially spending more, to help mitigate the virus crisis,” said Paul Sandhu, head of multi-asset solutions, APAC, BNP Paribas Asset Management in Hong Kong. Kong. “That means there will be a weaker dollar.”
Analysts generally assume that a Democratic-controlled Senate would be positive for global economic growth and therefore for the riskiest assets, but negative for bonds and the dollar, assuming the U.S. budget and trade deficits they would increase even more.
Ten-year U.S. Treasury yields rose above 1% for the first time since March, according to expectations of higher government debt under a 50-50 Senate split, with the vice president-elect Kamala Harris, as president of the upper house, becoming the tie. breaker.
To get a graph of 10-year U.S. Treasury yields above 1%:
“History tells us that it’s much easier to do things when a party controls everything, as Democrats and Republicans have had a hard time cooperating for at least 30 years,” Danske analysts said in a note.
Yields on German bonds followed Treasuries to peak in almost five weeks. [GVD/EUR]
The euro rose to $ 1.2344, a level last seen in April 2018, while the yen hit a 10.5-month high of $ 102.57. The dollar hit its lowest point in almost six years against the Swiss franc.
Bitcoin rose more than 5% to a record high of $ 35,879.
Global equities gained 0.1%, retreating to recent record highs, and European equities rose 0.08%.
But futures for the U.S. benchmark S&P 500 fell 0.7%, while Nasdaq futures fell 2.1%, amid fears that Democrats could apply stricter regulations to large tech companies.
Other industries, such as banking, oil and gas and healthcare, could be subject to strict control, while infrastructure and alternative energy sectors could benefit.
OIL CLIMBING
Oil prices rose to a peak in February 2020 after Saudi Arabia agreed to cut production more than expected at a meeting with Allied producers, while industry figures showed that U.S. crude stocks fell last week. [O/R]
U.S. crude futures rose to a high of $ 50.24 a barrel before cutting gains, after rising 4.9% on Tuesday.
International benchmark crude oil futures rose 0.54% to $ 53.89.
In Asia, the Japanese Nikkei fell 0.4%, while the Asia-Pacific MSCI index, excluding Japan, erased previous gains from flat trading.
Shanghai stocks rose gains, with a CSI300 index rising 0.7% and reaching its best levels since 2008, leaving aside the chaotic handling of the New York Stock Exchange on how Chinese companies will deal to comply with the sanctions set by the Trump administration.
The exchange made a second abrupt change of changes by saying it was reconsidering its plan to allow three Chinese telecommunications giants to continue trading.
Additional reports from Hideyuki Sano in Tokyo, Scott Murdoch in Hong Kong and Tom Westbrook in Singapore; Edited by Sam Holmes, Kenneth Maxwell and Alex Richardson