US Treasuries Yields Fall, Dollar Firms Concern Over Delayed Stimulus

LONDON / SINGAPORE (Reuters) – Yields on U.S. Treasuries fell to three-week lows, while stock markets were mixed on Tuesday over concerns over possible obstacles to the expected $ 1.9 trillion stimulus. dollars by new US President Joe Biden weighing on investor sentiment.

Rising coronavirus cases and cautiousness ahead of the US Federal Reserve’s policy meeting this week have also dampened risk appetite, lending support to the dollar against a basket of currencies. Oil prices have fallen slightly.

The yield on 10-year German government bonds, considered Europe’s safest asset, fell to a two-week low amid a new political crisis in Italy.

But European stock markets [.EU] After two sessions of decline, the pan-European STOXX 600 index rose 0.8%, after Swiss wealth manager UBS posted a rise in quarterly net profit.

“So far the earnings season has been very good, so it comes down to the fact that the market has been overbought and has seen a strong recovery since January 1, with lots of positive news,” said François Savary, Chief investments. head of Swiss wealth manager Prime Partners, citing recent losses.

“There is room for consolidation.”

Futures contracts on E-Mini for the S&P 500 lost 0.1%. On Monday, the Nasdaq index hit a new high but the Dow Jones Industrial Average slipped [.N].

South Korea and Hong Kong topped the losers in Asia overnight, falling by more than 2% each. The selloff also saw Japanese stocks slide 1% and Chinese blue chips by 2%, their biggest one-day loss since September 9.

All of them had reached landmark highs earlier this month.

The MSCI All Country World Index, which tracks stocks from 49 countries, remained stable, while the MSCI Emerging Markets Stock Index fell 1.6%.

Rising tensions in the Taiwan Strait and South China Sea have added to the cautiousness in Chinese markets, where a surge in small-cap short betting has also caught the attention of regulators.

After a multi-month buy-all rally, supported by pandemic money-printing stimulus packages, near-zero interest rates and the start of COVID-19 vaccination programs, some investors fear the markets are close to the territory of the “bubble”.

They are signaling the surge in prices of assets such as bitcoin or, on Monday, the surge in the stock of video game retailer Gamestop.

U.S. lawmakers have agreed that delivering COVID-19 vaccines to Americans should be a priority, even though they’ve locked down the size of a pandemic relief package. Democratic majority leader Chuck Schumer nevertheless warned that the relief package could be in four to six weeks.

The disagreements have meant months of indecision in the United States, where COVID-19 cases are over 175,000 a day and millions of people are out of work.

“We suspect that profits may not be able to catch up with what people expect this year,” said Jacob Doo, chief investment officer of Envysion Wealth Management, citing lockdowns in Europe and the slow rollout of vaccines to the United States.

“In the tech space, we’re cautious of FANGS now, just because there might be anti-trust laws Biden would implement,” he added, using an acronym for big US tech companies. , including Facebook and Amazon.

Investors are also anxiously awaiting the Federal Reserve’s Federal Open Market Committee meeting on Tuesday and Wednesday.

“We expect the January FOMC to repeat and reinforce the Fed’s existing bias, which is still important given recent reduction talks and other central banks’ considerations to adjust policy,” the strategist said. of CitiFX Ebrahim Rahbari in a note.

Against a basket of rivals, the dollar rose 0.2% to 90.65, its highest level since Jan. 20, as equity volatility dampened appetite for riskier currencies.

The euro, which fell on Monday after a survey showed German business morale plummeting, slipped 0.2% to $ 1.2126. [USD/]

The yield on benchmark 10-year US Treasuries slipped a fraction to new three-week lows, last trading at 1.0414%. [US/]

German 10-year bond yields fell from a basis point to a two-week low of -0.561%, while Italian 10-year yields edged up on that day to 0.655%.

Italian Prime Minister Giuseppe Conte will resign on Tuesday, his office said, hoping that President Sergio Mattarella will then give him the mandate to form a new government.

After rising nearly 1% on Monday, Brent crude fell 0.5% to $ 55.60 a barrel and US crude fell 0.5% to $ 52.51. [O/R]

Spot gold fell 0.2% to $ 1,852.30 an ounce.