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GLOBAL MARKETS-Bonds slip as markets bet Biden goes big

Published 14/01/2021, 05:44 pm
© Reuters.
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* U.S. yields bounce after report of $2 trillion stimulus plan

* Nikkei hits fresh three-decade peak

* U.S. and European futures edge higher

By Tom Westbrook

SINGAPORE, Jan 14 (Reuters) - U.S. Treasuries slipped on Thursday on a report that President-elect Joe Biden will announce a stimulus package as big as $2 trillion, while Japanese stocks surged to a new three-decade peak as investors extended bets on a global growth rebound.

The yield on benchmark 10-year U.S. Treasuries US10YT=RR rose two basis points to 1.1105% after CNN reported on the possibility Biden could spend $2 trillion, which is much more than market expectations and which would be funded by borrowing.

Japan's Nikkei .N225 closed up 0.9% at its highest level since August 1990. It has gained 25% since the end of October.

MSCI's index of Asia shares outside Japan .MIAPJ0000PUS was steady a whisker short of Monday's all-time high. S&P 500 futures ESc1 , FTSE futures FFIc1 and EuroSTOXX 50 futures STXEc1 all rose about 0.2%.

Treasury yields had tempered their surge this year on Wednesday as reassurances from the Federal Reserve about its purchase program calmed a heavy bond selloff and investors bet a big spending agenda can clear a Democrat-controlled Congress.

Biden is due to outline his economic plans later on Thursday and U.S. Federal Reserve Chairman Jerome Powell will also speak, either one of which could set yields rising again.

"The number one question for global markets and equities will be when will the Fed start tapering," said Frank Benzimra, head of Asia equity strategy at Societe Generale (PA:SOGN) in Hong Kong.

"This is where you can get some concern... but at the moment it is something that is a bit premature. We are in a context where you have growth accelerating, economic indicators are good, and in the U.S. the increased probability of fiscal stimulus."

Currency markets are taking a little more of a wait-and-see approach, as investors are short dollars and wondering whether the eventual tapering might limit the greenback's decline. FRX/

The dollar rose 0.2% to 104.12 yen JPY= with U.S. yields after the CNN report, which cited one lawmaker in contact with Biden's advisers as its source.

The Australian and New Zealand dollars firmed after slipping a little overnight, with the Aussie AUD= at $0.7761 and the kiwi NZD= at $0.7203. The euro EUR= nursed broad but modest losses at $1.2151 and 126.42 yen EURJPY= .

EXPORTS BOOM

Stellar economic statistics, meanwhile, kept flowing in North Asia. China's exports grew more than expected in December - pointing to solid global demand - while machinery orders rose for a second straight month in Japan. blue chips .CSI300 eased from a 13-year peak hit on Wednesday as investors took some profits. .SS

Hong Kong listed shares of tech giants Alibaba (NYSE:BABA) 9988.HK and Tencent 0700.HK rose after sources told Reuters and the Wall Street Journal that plans to extend a U.S. investment ban to the stocks had been scrapped. Washington, the Democrat-controlled House of Representatives impeached President Donald Trump for a second time. But markets have been more focused on his attacks on Chinese companies.

Trump bolstered a ban on U.S. investments in Chinese companies deemed to be linked with the military by clarifying late on Wednesday that American investors cannot own them after November 2021. commodity markets, oil futures nursed modest losses as fresh surges in coronavirus cases stoke worries about more lockdowns and lower energy demand. Brent crude futures LCOc1 were steady at $55.95 a barrel and U.S. crude futures CLc1 flat at $52.88.

Gold XAU= , which pays no interest, has suffered as U.S. yields have climbed and it traded 0.2% lower at $1,840 an ounce - well below a two-month peak of $1,959 hit a week ago. GOL/

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