S&P 500 Has Best Day Since June; Treasuries Drop

Stocks climbed as confidence returned to markets, with investors shaking off concern about the impacts of higher Treasury yields. The S&P 500 rose by 2.38% to 3,901.82 while Dow Jones was up 603.14 points (1.95%) to 31,535.51.

Fed’s Barkin Plays Down Market Swing, Says Focus Is Real Economy

Federal Reserve Bank of Richmond President Thomas Barkin played down recent Treasury market volatility, in remarks that reinforce the message that the US central bank is not yet troubled by the increase in yields. He is mostly concerned about the labor market, Barkin said. US Treasury yields surged last week, with the 10-year yield reaching the highest in a year.

Democrats Shelve Minimum Wage Tax to Speed Work on Stimulus

Senate Democrats are jettisoning a proposal to use the tax code to penalize corporations that don’t raise the minimum wage for their lowest-paid workers in an effort to keep President Joe Biden’s broader stimulus plan on track for quick passage, according to two people familiar with the matter. Democrats were left seeking alternatives after the Senate parliamentarian ruled that raising the federal minimum wage to US$15 an hour as part of the US$1.9 trillion pandemic relief legislation failed to qualify under fast-track budget rules

ECB’s Villeroy Signals Action to Battle Threat of Rising Yields

The European Central Bank “can and must react against” any unwarranted rise in bond yields that threaten to undermine the euro-area economy, policy maker Francois Villeroy de Galhau said. The comments by the Bank of France governor, among the strongest yet by ECB officials, encouraged investors to bet that the central bank is already stepping up its own emergency bond-buying program.

Euro-area Factory Costs Rising at Fastest Pace in a Decade

Euro-area manufacturers are reporting the steepest increases in their input costs in almost a decade as the coronavirus disrupts supplies, and are passing at least some of that burden onto customers. Rising demand for goods is running into virus restrictions that are causing delivery delays and pushing up prices for raw materials and components, according to an IHS Markit survey.

BOJ Still Ready to Defend Yield Range Before Review

Bank of Japan officials are still prepared to stem any risk of Japan’s benchmark bond yield rising too much ahead of a policy review later this month and could even act before it hits 0.2%, according to people familiar with the matter. The central bank has no pre-set yield level in mind for entering the market as it depends on the speed of gains, the level, the main reasons behind increases and the state of global financial markets, among other factors, they said.

RBNZ Says It Can Increase Weekly Bond Purchases If Needed

New Zealand’s central bank said it’s watching financial markets closely for signs of dysfunction and warned it has the ability to increase its weekly bond purchases to put more downward pressure on yields. The Reserve Bank “observed pockets of dysfunction” last week and has the operational flexibility to adjust its Large Scale Asset Purchase program up or down, Assistant Governor Christian Hawkesby said.

Oil Falls With OPEC+ Meeting Hovering Over Tightening Market

Oil plunged as the dollar pared losses ahead of a key OPEC+ meeting scheduled this week that may return more supply back to a fast-tightening market. Brent crude for May settlement fell US$0.73 to US$63.69 per barrel.

Source: Affin Hwang Research - 2 Mar 2021