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WATCH THOSE BOND YIELDS (0748 GMT)
U.S. President-elect Joe Biden is expected to announce plans
for "trillions" in new relief bills this week and therein lies
the explanation for why stock markets hit record highs on Friday
despite the dispiriting 140,000 drop in U.S. payrolls in
December.
But with most of this largesse due to be paid for by
borrowing, bond markets are starting to move. Ten-year U.S.
yields above 1.10%, the highest since March, and money-markets
are bringing forward the timing of the first Fed rate hike, in
turn boosting the dollar.
Bad news for risk sentiment -- Wall Street futures are duly
0.6% lower, while Europe too is opening a touch weaker. The euro
is trading below $1.22 for the first time since Christmas Day
and euro zone yields are a touch lower.
At the other side of the world, the yuan's gains have been
halted by the dollar's sudden upward move and stocks are lower.
However, data showed Chinese factory gate prices falling at the
slowest rate in 11 months -- meaning the manufacturing sector
continues to recover -- while consumer prices returned to growth
after slipping in November.
It will be a busy week. JPMorgan and Citi kick off Q4 U.S.
results which are expected to have fallen around 10%, though
focus will be on 2021 guidance. Sino-U.S. tensions could
escalate further during President Donald Trump's last full week
in the White House while Germany's ruling CDU will elect Angela
Merkel's successor.
And lets not forget the pandemic is still rampant, with the
contagious new variant taking global COVID-19 cases past 90
million. All the best laid plans could be disrupted unless its
grim progress is slowed.
Key developments that should provide more direction to markets
on Monday:
- Goldman Sachs JPMorgan and Morgan Stanley will delist 500 Hong
Kong-listed structured products
-On the electric vehicles front, Hyundai Motor and Apple Inc
plan to sign a partnership deal on autonomous electric cars by
March; China's Baidu is to partner with carmaker Zhejiang Geely
to make smart EVs
-Airline easyJet took out a five-year loan facility of $1.87
billion, backed by a partial guarantee from Britain.
-Dallas Fed's president Kaplan and Atlanta Fed's Bostic speak
-U.S. Treasury to auction 6-month and 3-month t-bills.
(Sujata Rao)
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EUROPEAN STOCK FUTURES IN THE RED (0628 GMT)
European stock futures are in the red as markets seem to be
willing to take a breather after a recent surge on expectations
of more fiscal stimulus in the U.S.
Investors are wary of U.S. politics with President Donald
Trump seen as a risk factor in his last nine days in office,
while Democrats are trying to oust him.
Besides the U.S. are lifting restrictions on Taiwan in a
move that is likely to anger China and increase tensions between
Beijing and Washington.
Virus worries continue to weigh with most of Europe under
strictest restrictions and mainland China seeing its biggest
daily increase in virus infections in more than five months.
(Stefano Rebaudo)
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