Treasury Yields Steady After Drop; Japan Stocks Up: Markets Wrap

Treasuries showed signs of stabilizing Thursday after the recent retreat in yields as traders awaited comments from Federal Reserve Chairman Jerome Powell for clues on the policy outlook. In Asia, Japanese stocks outperformed.

Yields steadied after dropping from the highest levels since March following two strong bond auctions this week. U.S. stock futures edged higher after technology shares led Wall Street gains, with the Nasdaq 100 outperforming the S&P 500. The dollar gave back a sliver of its advance from Wednesday.

Alibaba Group Holding Ltd. and Tencent Holdings Ltd. climbed after the U.S. decided against banning American investment in the Chinese tech giants. Oil held losses and Bitcoin was little changed at about $37,500.

“This will be a great year for the economy and earnings, but just a good year for the stock market,” Bob Doll, chief equity strategist at Nuveen, said on Bloomberg TV. “In other words, I think multiples are held back a bit because of modestly rising interest rates and inflation.”

The latest comments from policymakers reinforced expectations of loose monetary policy to cope with the pandemic. Fed Governor Lael Brainard pushed back against suggestions the central bank could taper its bond-buying program this year, while European Central Bank council member Francois Villeroy de Galhau said the ECB will keep an easy stance for as long as needed.

Powell later Thursday is scheduled to discuss topics including the Fed’s policy framework, while President-elect Joe Biden is expected to announce his plans for substantial economic aid. Earlier, the House of Representatives voted to impeach President Donald Trump for a second time. A Senate trial for Trump won’t likely get underway before his term ends on Jan. 20.

On the virus front, the U.K. reported the most deaths in one day since the pandemic began. Johnson & Johnson’s single-dose Covid-19 vaccine may not be authorized for use until March, weeks later than U.S. officials had suggested.

Here are some key events coming up:

  • JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. are among firms due to report earnings.
  • U.S. President-elect Joe Biden plans to lay out proposals for fiscal support on Thursday.
  • Federal Reserve Chairman Jerome Powell takes part in a webinar on Thursday.
  • U.S. initial jobless claims data are due Thursday.
  • U.S. retail sales, industrial production, business inventories and consumer sentiment figures are due Friday.

These are some of the main moves in markets:

Stocks

  • S&P 500 futures gained 0.3% as of 10:49 a.m. in Tokyo. The gauge rose 0.2% on Wednesday.
  • Japan’s Topix index added 0.7%. The Nikkei 225 rose 1.2%.
  • Hang Seng gained 0.2%.
  • Shanghai Composite lost 0.4%.
  • South Korea’s Kospi index was flat.
  • Australia’s S&P/ASX 200 Index rose 0.4%.

Currencies

  • The Bloomberg Dollar Spot Index dipped 0.1%.
  • The euro bought $1.2166, up 0.1%.
  • The yen was at 103.85 per dollar.
  • The offshore yuan traded at 6.4610 per dollar.

Bonds

  • The yield on 10-year Treasuries was little changed at 1.08%.
  • Australia’s 10-year yield fell about four basis points to 1.07%.

Commodities

  • West Texas Intermediate crude retreated 0.1% to $52.86 a barrel.
  • Gold was at $1,849 an ounce, rising 0.3%.

— With assistance by Dave Liedtka, Vildana Hajric, Benjamin Purvis, Claire Ballentine, Cormac Mullen, and Joanna Ossinger

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