S&P 500 Index opens higher on greater political clarity. Markets don’t like uncertainty, and the release of transition funds by the General Services Administration and certification of election results in Michigan both point to less of a chance of a contested election. Prospects of a Janet Yellen-led Treasury help reduce policy uncertainty and are lifting investor sentiment this morning.
- Major European indexes were mostly higher midday despite a weaker reading from Germany’s Ifo Pan Germany Business Expectations, particularly on the services side.
- The MSCI Asia Pacific Index climbed overnight despite modest losses for China’s Shanghai Index, with Japan’s Nikkei up over 2%.
Treasury yields may move higher. Each time the economy recovered from the last seven recessions, the difference between the 10-year and 3-month Treasury yield eventually steepened to more than 2%. The current economic environment may not merit such a large move, but it certainly points to the likelihood that rates may continue to push higher. We review the history of the yield curve after a recession and what it may mean for future rates in the LPL Research blog.
Technical update. US equities were modestly higher on Monday and are continuing that rise in early trading today. The energy sector gained more than 7% Monday as oil prices continued to rise. Oil is pushing against the top of a multi-month range this morning, briefly hitting its highest level since March 6. The S&P 500 needs to climb above 3626 to signal a breakout from its recent sideways consolidation.
COVID-19 news. New daily cases in the United States were near 150,000 for the second straight day on Monday, just 1.6% above the prior week (source: COVID Tracking Project).
- The seven-day average increased 11.4%, the smallest increase since October 9.
- Hospitalizations were flat week over week, slowing the seven-day average uptrend to below 9%.
- AstraZeneca’s vaccine showed potential in halting severe cases, according to a US government official.
- The United Kingdom plans to end its current lockdown at the beginning of December.
- Japan is moving toward restrictions on bars and restaurants in Tokyo and Osaka.
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