- Stocks and bond yields continue higher on very little news.
- Markets await US retail sales tomorrow.
- Chinese stocks lead Asia lower.
- US senate bill seeks to avert government shutdown. Markets Overnight
US stock markets pushed higher again yesterday
on a day with very little news. S&P500 added another 0.3% to this year’s gains, putting it at a total rise of 9% so far this year. In Asia markets trade lower as Chinese stocks reversed early gains. The Chinese market is currently struggling with tighter housing regulation and disappointing activity data over the weekend.
With little news out today as well the next guidepost for the markets will be tomorrow’s US retail sales report for February.
In the bond market, US yields continue to trend higher as investors continue to rotate into stocks and last Friday’s decent payrolls have increased expectations of a scale back of QE this year.
Another trend that continues is the weakening of the yen. USD/JPY has pushed up to 96.7 overnight before falling slightly back again. EUR/USD gained late yesterday to 1.305, while EUR/NOK climbed above 7.46.
US Senate Democrats yesterday presented a bill to avoid a government shutdown on 27 March. The bill builds on similar legislation passed in the House. While aiming to avert a government shutdown, it does nothing to replace the sequester with USD85bn in spending cuts.
Today, US Republicans are to present a USD4.6bn plan of spending cuts. Paul Ryan, chairman of the House Budget Committee, will - as in the previous three years - present a plan that includes substantial cuts in social security while sparing defence and not raising new revenue. The plan will be the Republicans’ starting point for tough negotiations with the Democrats who want focus to be on cuts in defence spending and raising new revenue – see FT.
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