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Treasuries Jump With Dollar as Count Continues: Markets Wrap

  • Offshore yuan, Aussie retreat; S&P 500 futures fluctuate.

  • Markets see volatility as election indicates tight race.

Treasuries surged, the dollar climbed and U.S. equity futures swung as early tallies suggested the outcome of the American presidential election could be closer than polls had suggested.



Benchmark Treasury yields reversed sharply, falling toward 0.8% after earlier surpassing 0.9%. A portion of the yield curve had steepened the most since 2016 on bets for further stimulus. The dollar advanced the most since June after erasing losses. S&P 500 futures fluctuated after rising over 1%, though Nasdaq 100 contracts pointed higher. The offshore yuan and Mexican peso retreated and gold fell.


Joe Biden scored early wins in traditionally Democratic states in the eastern U.S. while President Donald Trump won Republican strongholds in the south and Midwest, according to the Associated Press and networks. Key battlegrounds are still to be decided. Trump held a narrow lead in Florida, which remains undeclared and is viewed by his campaign as crucial to his re-election hopes.


Elsewhere, Alibaba Group Holding Ltd. tumbled as much as 9.3% in Hong Kong after China halted the initial public offering of Ant Group Co., in which Alibaba owns about a one-third stake. Asian stocks were mixed with Japan outperforming and Australia lagging.

Investors are bracing for the outcome of a divisive election following weeks of speculation that a contested result could roil markets. Heading into Tuesday, polls indicated Biden was ahead of Trump, though the race looked tight in some battleground states.

“Early prospects for a quick resolution to the U.S. election have given way to the reality of an extended process, not only with regards to the White House but also the Senate,” said Ian Lyngen, a strategist at BMO Capital Markets. “Volatile price action can only be expected to persist for the time being, at least until the path forward becomes clearer.”


These are some key events coming up:

  • EIA crude oil inventory report on Wednesday.

  • Federal Reserve policy decision on Thursday.

  • The key U.S. non-farm payrolls report is due Friday.

  • Earnings are due this week from companies including AstraZeneca Plc, Nintendo Co., Macquarie Group Ltd. and Toyota Motor Corp.

These are the main moves in markets:

Stocks

  • S&P 500 futures gained 0.3% as of 11:57 a.m. in Tokyo. The index rose 1.8% on Tuesday.

  • Japan’s Topix index advanced 0.8%.

  • Hang Seng lost 0.8%.

  • Shanghai Composite fell 0.2%.

  • South Korea’s Kospi index rose 0.3%.

  • Euro Stoxx 50 futures slipped 1.1%.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.9%.

  • The yen dipped 0.7% to 105.23 per dollar.

  • The offshore yuan fell 1% to 6.7506 per dollar.

  • The euro bought $1.1617, down 0.8%.

Bonds

  • The yield on 10-year Treasuries fell seven basis points to to 0.82%.

  • Australia’s 10-year yield gained three basis points to 0.80%.

Commodities

  • West Texas Intermediate crude rose 1.9% to $38.36 a barrel.

  • Gold was at $1,894.33 an ounce, down 0.8%.

By Adam Haigh & Joanna Ossinger

— With assistance by Cormac Mullen, Kamaron Leach, Dave Liedtka, Jeremy Herron, Kimberly Wayne, Claire Ballentine, and Gregor Stuart Hunter


Source: Bloomberg