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Stocks Climb, Treasuries Drop as Georgia Votes

Stocks rose and bonds dropped amid important elections in Georgia that should choose which party controls the U.S. Senate for the next two years, setting the scope of President-elect Joe Biden’s agenda.

In a session marked by thin trading volume, the S&P 500 rebounded after suffering its worst start to a year after 2016. Energy shares surged as oil traded near $50 a barrel, although the Russell 2000 Index of smaller businesses jumped 1.7 %. With markets factoring in an even greater chance of a Democratic sweep of Congress, several analysts see the chance for heightened volatility. In anticipation to the final result of the Georgia vote, that will probably be recognized on Wednesday, Treasury yields climbed — with a key curve measure reaching the steepest level of its in 4 years. The dollar slipped to the lowest since February 2018.

Whether or not Wall Street is getting much more at ease with the idea of Democrats taking control of both chambers of Congress, the scenario implies the risk of a considerably more generous stimulus program. That might potentially cause upward pressure on rates as well as inflation along with higher taxes to spend on fiscal tool. Alternatively, must possibly Republican incumbent win re-election, the party will have enough votes to block some Biden initiative.

We do not view a Democrat Senate as a bearish game changer in the short term because there would still be a great deal of positives in that market, Tom Essaye, a former Merrill Lynch trader who developed The Sevens Report newsletter, wrote to a note to clients. We’d appear to purchase on any sort of material dip, however, we must brace for more volatility going forward if that’s the end result at today’s election.

Meanwhile, President Donald Trump failed again to invalidate the election loss of his of Georgia and allow the state’s Republican-led legislature to declare him the winner — his latest courtroom defeat in a quixotic attempt to stay in office despite losing the Nov. three vote.

Another info development which caught investors attention was the brand new York Stock Exchange’s surprise choice to spare 3 leading Chinese telecommunications companies from being delisted. Treasury Secretary Steven Mnuchin called NYSE Group Inc. President Stacey Cunningham to express his disapproval, according to two people familiar with the matter. Many U.S. officials said the move marks a momentary reprieve, not an indication that tensions between Washington and Beijing are easing.

Somewhere else, Saudi Arabia surprised the oil market with a major decrease in the output of its for March as well as February, carrying a better burden of OPEC cuts while some other producers hold steady or even make little increases.

What to enjoy this week:

U.S. Congress meets counting electoral votes and declare the winner of the 2020 Presidential election Wednesday.
FOMC mins out Wednesday.
U.S. unemployment report for December is due Friday.
These are some of the principle moves in markets:

Stocks
The S&P 500 Index rose 0.7 % as of 4 p.m. New York time.
The Stoxx Europe 600 Index declined 0.2 %.
The MSCI Asia Pacific Index climbed 1.1 %.

Currencies
The Bloomberg Dollar Spot Index sank 0.5 %.
The euro gained 0.4 % to $1.2291.
The Japanese yen appreciated 0.4 % to 102.74 a dollar.

Bonds
The yield on 10-year Treasuries rose four basis points to 0.95 %.
Germany’s 10 year yield jumped three basis points to 0.58 %.
Britain’s 10 year yield climbed four basis points to 0.209 %.

Commodities
West Texas Intermediate crude surged 4.9 % to $49.93 a barrel.
Gold rose 0.3 % to $1,948.17 an ounce.

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