European Stocks Up Over Biden Promise of “Trillions” in COVID-19 Stimulus Measures

European Stocks Up Over Biden Promise of “Trillions” in COVID-19 Stimulus Measures

EURO STOXX 50 futures eased 0.1% and FTSE futures were flat.

Longer-term Treasury yields were at their highest since March after Friday’s weak jobs report only fanned speculation of more U.S. fiscal stimulus now that the Democrats have control of the government.

President-elect Joe Biden is due to announce plans for “trillions” in new relief bills this week, much of which will be paid for by increased borrowing.

At the same time, the Federal Reserve is sounding content to put the onus on fiscal policy with Vice Chair Richard Clarida saying there would be no change soon to the $120 billion of debt the Fed is buying each month.

With the Fed reluctant to purchase more longer-dated bonds, 10-year Treasury yields jumped almost 20 basis points last week to 1.12%, the biggest weekly rise since June.

Treasury futures lost another 3 ticks early Monday.

Mark Cabana at BofA warned stimulus could further pressure the dollar and cause Fed tapering to begin later this year.

“An early Fed taper creates upside risks to our year-end 1.5% 10-year Treasury target and supports our longer-term expectations for neutral rates moving towards 3%,” he said in a note to clients.

The poor payrolls report will heighten interest in U.S. data on inflation, retail sales and consumer sentiment.

Earnings will also be in focus as JP Morgan, Citigroup and Wells Fargo are among the first companies to release fourth-quarter results on Jan. 15.

The climb in yields in turn offered some support to the down-trodden dollar, which had edged up to 90.439 against a basket of currencies from last week’s low of 89.206.

The euro pulled back to $1.2170 from a recent top of $1.2349, breaking support around $1.2190. The dollar also firmed to 104.18 yen from a trough of 102.57 hit last week.

The pan-European Stoxx 50 climbed up by 0.62%  to 3,645.05. In the cash markets, the DAX futures Germany was trading 0.58%  higher at 14049.53. CAC 40 futures in France climbed up by 0.65% to 5,706.88, while the FTSE 100 futures in the U.K. rose by 0.24% to 6873.26,at the time of writing.

FTSE 100

EURO STOXX 50 futures

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