US stocks rise to records, Treasuries decline

US stocks notched a solid gain to close at all-time highs, even as lawmakers continue to wrangle over a federal-spending deal. The S&P 500 rose by 0.58% to 3,722.48 while Dow Jones was up 148.83 points (0.49%) to 30,303.37.

Powell sees light at end of tunnel and policy staying very easy

Federal Reserve Chairman Jerome Powell sounded the most optimistic he’s been since the coronavirus crisis began in March, while pledging that the central bank will keep providing the economy with plenty of support well into the future. Powell said he expects the economy to perform “strongly” in the second half of 2021 as more and more Americans are vaccinated against the virus -- though he cautioned that the next few months would be “challenging” until that occurs.

US jobless claims unexpectedly jump to highest in three months

Applications for US state unemployment benefits unexpectedly jumped to the highest level in three months, suggesting the labor market’s recovery is faltering amid the surge in Covid-19 cases and widening business restrictions. Initial jobless claims in regular state programs rose by 23,000 to 885,000 in the week ended Dec. 12, Labor Department data showed. On an unadjusted basis, the figure fell by about 21,000.

Weidmann says ECB stimulus risks hurting market discipline

The European Central Bank’s recent decision to boost its emergency bond-buying program risks weakening market discipline, Governing Council member Jens Weidmann said. The Bundesbank president said that there was a clear need for the central bank to act in response to the weakening outlook brought about by the pandemic. However, it’s “crucial” that the amount of government bonds held by the ECB doesn’t become too large.

BOE maintains QE, extends company aid on prolonged crisis

The Bank of England kept its monetary stimulus unchanged as it awaits the outcome of trade talks between the UK and European Union, while beefing up support for small businesses to get them through a pandemic that’s dragging on for longer than expected. The nine policy makers, voted unanimously to hold their benchmark interest rate at 0.1% and their total asset purchase target at 895 billion pounds ($1.2 trillion), stressing that they can accelerate or slow bond-buying as needed.

New Zealand economy surges out of recession In V-shaped recovery

New Zealand’s economy bounced back strongly from recession in the third quarter, achieving a so-called V-shaped recovery as massive fiscal and monetary stimulus fueled consumer spending. Gross domestic product surged 14% from the second quarter, when it contracted a revised 11%, Statistics New Zealand said.

Indonesia, Philippines hold key rates as recovery continues

Central banks in Indonesia and the Philippines held their benchmark interest rates steady and pledged to keep policy accommodative as their economies struggle with the worst virus outbreaks in Southeast Asia. Bank Indonesia held its seven-day reverse repurchase rate at 3.75%. Bangko Sentral ng Pilipinas kept its overnight reverse repurchase rate at 2%.

Crude rises with potential virus-relief deal fueling optimism

Oil climbed to the highest since February as US lawmakers discuss a virus relief deal that could provide a near-term boost to demand ahead of a wider distribution of the Covid-19 vaccine. Brent crude for February settlement gained US$0.42 to US$51.50 per barrel.

Source: Affin Hwang Research - 18 Dec 2020