Dow shot up 301 (going over 32K for another record), advancers over decliners better than 2-1 & NAZ soared 413. The MLP index was little changed holding at 170 & the REIT index added 3+ to the 385s. Junk bond funds crawled higher & Treasuries were sold following their recent rally (more below). Oil was flattish in the 64s & gold jumped 33 to 1711.
AMJ (Alerian MLP index tracking fund)
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The House plans to pass Dems' $1.9T coronavirus relief bill this week & get fresh aid to Americans starting this month. The chamber aims to approve the rescue package in time for Pres Biden to sign it before key unemployment programs expire on Sun. The Senate passed the legislationon Sat. Dem leaders hope to get the legislation thru the House as soon as Tues, but passage could slip to Wed as representatives wait for the Senate to send the massive proposal back across the Capitol. “It could be that we get it tomorrow afternoon and then it has to go to [the House Rules Committee]. And we’d take it up Wednesday morning at the latest,” House Speaker Nancy Pelosi told reporters. The bill extends a $300 per week boost to unemployment benefits thru Sep 6 & sends direct payments of up to $1400 to most Americans. The stimulus money will start hitting accounts this month, Biden said. The bill also includes an expansion of the child tax credit, rental payment assistance & funds for Covid-19 vaccine distribution & testing. It directs money to state, local & tribal govs, along with schools.
House prepares to pass $1.9 trillion Covid relief bill
Treasury yields slid as global equities attempted to stabilize after several days of continuous selling, inspired by fears that higher bond yields could weigh on global markets trading on stretched valuations. The 10-year Treasury note yield slipped 5.5 basis points to 1.539%, after hovering around 1.60% yesterday, while the 2-year note rate was flat at 0.161%. The 30-year bond yield tumbled 4.4 basis points to 2.260%. Bond prices move in the opposite direction of yields. An overnight rebound in Asian equities, following news that Chinese state investors had bought shares in domestic equities to support local markets, has been followed by a tentative optimism across the US & European stock markets that the intense selling pressure seen in the past few trading sessions may have run out of steam. Aiding the bullish risk sentiment, long-term gov debt yields retreated from their one-year highs. Investors have fretted an over-heating economy could force the Federal Reserve to lift interest rates at an earlier timetable than it had signaled.
U.S. Treasury yields tumble as global markets steady
The world economy is on track to be back to its pre-pandemic level by the middle of the year thanks to the $1.9T fiscal stimulus package that will add 3 percentage points to US growth this year, the Organization for Economic Cooperation & Development (OECD) said. Global GDP growth is now expected at 5.6% this year, more than 1 percentage point above the OECD's Dec forecast, thanks to the COVID-19 vaccine rollout & the US stimulus. The world economy is seen expanding by 4% in 2022. The US economy would expand by 6.5% this year, China by 7.8% & the eurozone by 3.9%. France & Italy, with GDPs up 5.9% & 4.1% this year respectively, are the only major economies whose prospects were not upgraded by the OECD compared to its Dec forecast. They are also among the countries that have been slowest in rolling out proper vaccination campaigns, “Faster and more effective vaccination deployment across the world is critical” to keep the momentum of the ongoing recovery, the OECD warns. “More jabs, more jobs,” it adds. The organization also notes that there “are increasing signs of divergence across countries and sectors,” & that “resources required to provide vaccines to lower-income countries are small compared with the gains from a stronger and faster global economic recovery.” The OECD report illustrates the magnitude of the “welcome demand spillovers” that US trade partners will benefit from after the Biden stimulus. It also underscores by contrast Europe's need to both accelerate its vaccination campaigns & do more to stimulate its economy.
Biden stimulus will give a major boost to the global recovery, OECD says
Enthusiasm by investors is riding high based on the stimulus package getting approved. However those guys in DC are not good at making things happen. The first checks will probably take a couple of weeks, if not longer, to reach taxpayers. The vast bulk of the spending is for pork & much of that money will not be sent for a couple of years. Meanwhile just about everybody is predicting that 2021 will be a year growth, along with next year. This stock rally is based on euphoria which can not be expected to last.
Dow Jones Industrials
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