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Friday, the 13th : U.S. Treasury yield curve steepens, Stocks upbeat

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It’s called paraskevidekatriaphobia- the fear of Friday the 13th. One may not be very sure how to pronounce it but for Wall Street, it was not a day of fear but of relative cheer.

Wall Street gained momentum and the U.S. Treasury yield mostly higher but seemed range-bound due to COVID fears.

The curve steepened as upbeat earnings and assurances from President-elect Joe Biden’s COVID advisory team helped investors look past the threat of new economic lockdowns to combat record spikes of more than 100,000 people being infected daily.

The U.S death toll from the deadly virus is now fast approaching the 2,50,000 mark.

Economically sensitive cyclicals and small caps, stocks that were the stars of the rally at the beginning of the week, once again led the charge.

On Monday, investor risk appetite was boosted by Pfizer Inc’s PFE.N announcement that the COVID-19 vaccine being developed with German partner BioNTech SE BNTX.O appeared to be 90% effective. Positive results from Cisco Systems Inc CSCO.O and Walt Disney Co DIS.N helped send Wall Street’s three major stock indexes higher.

The S&P 500 and the blue-chip Dow were on track to post their second straight weekly gains, while at current levels the tech-heavy Nasdaq is lower than last Friday’s close.

“It’s been a tug of war between the eventual distribution of a vaccine which now looks fairly certain for 6 to 9 months from now, and the near-term prospects of a massive infection rate not only in the U.S. but globally. Investors are trying to grapple with whether to look long- term to where the virus has been eradicated or reflect the near-term economic fallout from shutdowns” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

President-elect Joe Biden further cemented his claim to White House with more election victory as Arizona’s 11 electoral college votes were added to his column, but the official transition remains hanging by the thread as President Donald Trump is adamant to concede defeat.

Biden’s COVID 19 task force meanwhile is in a fierce combative mood to work out a plan to fight the pandemic without any more shutdowns.

The Dow Jones Industrial Average.DJI rose 234.07 points, or 0.8%, to 29,314.24, the S&P 500 .SPX gained 25.88 points, or 0.73%, to 3,562.89 and the Nasdaq Composite .IXIC added 55.43 points, or 0.47%, to 11,765.02.

European stocks too turned positive after surging COVID infections threatened to halt the week’s sharp rally.

The pan-European STOXX 600 index.STOXX rose 0.19% and MSCI’s gauge of stocks across the globe.MIWD00000PUS gained 0.46%. Emerging market stocks rose by 0.48%.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.46% higher, while Japan’s Nikkei .N225 lost 0.53%.

U.S. Treasury yields were mixed as investors consolidated positions ahead of the weekend and remained cautious overall given the daily gain in COVID 19 cases. However, the yield curve steepened on Friday, after flattening the previous session.

Benchmark 10-year notes US10YT=RR last fell 2/32 in price to yield 0.893%, from 0.886% late on Thursday.

The 30-year bond US30YT=RR last rose 4/32 in price to yield 1.6462%, from 1.652% late on Thursday.

Crude oil prices slipped as rising infections threatened hopes of a demand rebound. Still, oil remains on track to post its second straight weekly gain. U.S. crude CLcv1 fell 1.8% to $40.38 per barrel and Brent LCOcv1 was last at $42.87 per barrel, down 1.52% on the day.

The dollar was down, but the safe-haven yen and Swiss franc strengthened, reflecting a loss of risk appetite driven by vaccine hopes.

The dollar index .DXY fell 0.17%, with the euro EUR= up 0.17% to $1.1824.

The Japanese yen strengthened 0.47% versus the greenback at 104.65 per dollar, while Sterling GBP= was the last trading at $1.3168, up 0.41% on the day.

 

 

 

 

 

 

 

 

 

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