Joint
Benchmark Treasury yields hit 1% for the first time since March, and technology stock futures fell as investors assessed the implications of potential Democratic control of the Senate, such as additional fiscal stimulus to support economic growth and tax increases. Nasdaq 100 futures plummeted, a sign of concern about the possibility of intensified antitrust scrutiny of internet giants under the so-called "blue wave." Markets began to price in the possibility of a Democratic-controlled Congress after Raphael Warnock ousted Republican Kelly Loeffler in a runoff election, leaving Senate control dependent on the other state elections, which are still ongoing. Cyclical stocks posted gains, with futures on the Russell 2000 index of small-cap stocks rising more than 1%. European stocks edged higher, led by banks and energy companies.
Fixed rent
The 10-year Treasury yield returned to 1%, indicating positioning for the “Blue Wave.” If lawmakers were to approve additional stimulus spending, it would mean more bond issuance and higher yields on longer-term Treasuries. Traders now see average U.S. inflation above 2% annually for the next decade, the highest level since 2018. U.S. government bond prices fell to their lowest point since the start of the coronavirus crisis on Wednesday as investors bet that Democrats were poised to capture the Senate and clear the way. Democratic control of the Senate could open the door to reflation trades. The spread between five- and 30-year bond yields hit its steepest since November 2016, when Donald Trump’s election triggered trades based on stronger growth and higher inflation. While the pandemic is still raging with vaccine rollouts in the early stages, the risk is that renewed signs of inflationary pressure will begin to materialize bets on Federal Reserve rate hikes. U.S. 10-year brekevens, a market-based gauge of inflation expectations for the coming decade, topped 2% for the first time since 2018, having gained in each of the past three months. Longer-dated European bonds also fell, with German and French 10-year bond yields rising around three basis points. Equivalent U.K. bund yields opened as high as six basis points at 0,27% before paring the move. The 10-year Treasury yield gained six basis points to 1,01%. The two-year Treasury yield gained one basis point to 0,13%. The German 10-year yield rose six basis points to -0,52%. Britain's 10-year yield gained three basis points to 0,24%.
Money Exchange
The Colombian peso (COP) closed at $3444.19, down 0.14% the previous day near the 20D PM, amid continued weakness in the USD globally, strengthening oil prices, and optimistic sentiment in both the regional stock markets and currencies.
Variable income
US stock futures are posting mixed performance during pre-market trading on Wednesday, as traders maintain a cautious tone in their investments, awaiting the FOMC minutes and the election results. So far, the consensus seems to discount a Democratic Senate as more likely, which could pressure equity assets amid a prospect of higher taxes. However, companies hardest hit by the pandemic could receive a greater boost amid expectations of greater fiscal stimulus. In this sense, the balance is not likely to favor technology stocks, which are posting weak performance during the pre-market. Meanwhile, the stocks that benefit most from this scenario are the biggest winners, including banking stocks such as JPMorgan Chase and Bank of America. Amid this backdrop, Dow Jones Industrial Average futures are up more than 90 points, or more than 0.3%, while Nasdaq 100 futures are down about 1.3%, recovering some of their initial losses, and S&P 500 futures are trading down about 0.08%.
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