Stocks Climb, Treasuries Drop as Georgia Votes

Stocks rose and bonds dropped amid key elections in Georgia that will decide which party controls the US Senate for the next two years, setting the scope of Presidentelect Joe Biden’s agenda. The S&P 500 rose by 0.71% to 3,726.86 while Dow Jones was up 167.71 points (0.55%) to 30,391.60.

Fed’s Mester Says Policy Should Hold Steady in Coming Months

The US economy will require steady, continued support from monetary and fiscal policy throughout 2021 as it faces a bleak winter before reaching a vaccine-driven, mid-year rebound, according to Federal Reserve Bank of Cleveland President Loretta Mester. “A slowdown in the economy in the first part of the year along the lines I am expecting would not require a change in monetary policy so long as the medium-run outlook remains intact,” Mester said.

US Manufacturing Gauge Expands at Fastest Pace Since 2018

A measure of US manufacturing expanded in December at the fastest pace in more than two years, bolstered by a pickup in new orders and the strongest growth in production since 2011. A gauge of factory activity unexpectedly increased to 60.7 from 57.5 a month earlier, according to Institute for Supply Management data released.

German Unemployment Unexpectedly Fell During December Lockdown

German joblessness unexpectedly declined in December, though companies were heavily dependent on government subsidies to keep workers employed through the latest lockdowns. A decrease of 37,000 left the total number of unemployed people at 2.776 million and the rate unchanged at 6.1%, according to the Federal Labor Agency.

ECB Should Weigh Yield-curve Control, Hernandez De Cos Says

European Central Bank (ECB) policy maker Pablo Hernandez de Cos says the institution should consider a policy to actively manage governments’ borrowing costs. “Yield-curve control is an option worth exploring,” Hernandez de Cos said in an interview with the publication Central Banking. The strategy, which has been previously aired by colleagues and is used by the Bank of Japan and the Reserve Bank of Australia, typically entails policy makers setting yield targets on longer-term bonds.

Sunak Hands US$6.2bn to UK Firms Facing Lockdown Recession

Chancellor of the Exchequer Rishi Sunak announced 4.6 billion pounds (US$6.2bn) of emergency support to help UK businesses survive a third lockdown that threatens to plunge the economy into a sharp double-dip recession. Retail, hospitality and leisure businesses will be entitled to one-off grants of as much as 9,000 pounds to tide them over until the spring, the UK finance minister said.

Singapore Home Prices Rise to Highest in More Than Two Years

Singapore home prices rose to the highest in more than two years last quarter as the city-state forecasts a recovery from its worst recession since independence as Covid vaccinations are rolled out and restrictions eased. Property values increased 2.1% in the three months ended Dec. 31, according to a preliminary estimate by the Urban Redevelopment Authority released. That’s the biggest increase since the second quarter of 2018, when prices increased by 3.4%.

WTI Oil Tops US$50 With Saudis Pledging a Surprise Unilateral Cut

WTI oil surged to its highest since February after Saudi Arabia pledged to voluntarily cut output by an extra 1 million barrels a day in what Russia’s Deputy Prime Minister described as a “new year gift” to the market. Brent crude for March settlement gained US$2.51 to US$53.60 per barrel.

Source: Affin Hwang Research - 6 Jan 2021