© Reuters. A man wearing a protective face mask walks past a screen displaying a graph showing the current Nikkei average outside a broker during the coronavirus disease (COVID-19) outbreak in Tokyo
From Hideyuki Sano
TOKYO (Reuters) – Global stock prices got off to a solid start, while U.S. bond yields were near a 13-month high on Monday as investors bet that U.S. economic growth will accelerate following the adoption of a massive stimulus package becomes.
US futures rose 0.25% in early Asian trade, trading just below a record high last week while rising 0.1%.
MSCI's broadest index for stocks in the Asia-Pacific region outside of Japan has barely changed.
"With the approved $ 1.9 trillion economic package, there is strong expectation of an economic recovery that will prop up cyclical stocks," said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui (NYSE 🙂 DS Asset Management.
The US House of Representatives finalized the COVID-19 Relief Act last week and gave President Joe Biden his first major victory in office.
Some investors speculate that some of the $ 1,400 direct payments to households could find their way to the stock markets, as appeared to be the case with similar direct payments made last year for coronavirus relief.
Investors also suspect that the $ 1.9 trillion package, which accounts for more than 8% of the country's GDP, could not only boost growth, but also boost inflation – to the detriment of bonds.
Rising inflation expectations could lead the Federal Reserve to signal that it will start rate hikes sooner when it releases its latest economic forecast at the end of the Federal Open Market Committee (FOMC) meeting on Wednesday.
"After the stimulus packages, this is inevitable
that the Fed's GDP projections will be revised and some FOMC members may believe that interest rates must rise earlier than they expected last December, "wrote ANZ economists.
The US 10-year Treasury yield was 1.638% early Monday after rising to 1.642% on Friday, a high last seen in February last year.
In addition to the continued economic optimism in the US and increased expectations of debt supply after the stimulus, uncertainties about whether the Fed will extend a relaxation of the emergency regulation in the so-called "Supplementary Leverage Ratio" (SLR) added to the unease.
With higher US bond yields, the dollar appreciated against other major currencies.
The euro fell from last week's high of $ 1.1990 to $ 1.1953 while the dollar remained at 109.07 yen, near the nine-month high of $ 109.235 set last Tuesday.
The British pound fell 0.25% to $ 1.3934.
slipped to $ 59,691, a record high of $ 61,781 on Saturday after Reuters reported that a senior Indian government official said Delhi would propose a law banning cryptocurrencies, penalizing anyone in the country, or even holding such digital assets .
Oil prices were propped up by production cuts by major oil producers and optimism about a recovery in demand as the global economy recovers from the pandemic-triggered recession.
Futures were trading at $ 65.93 a barrel, up 0.5% on the day.
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