Stocks are higher despite the rising U.S. China tensions

Stocks are higher despite the rising U.S. China tensions 981 980 Realm

Stocks are higher again this morning despite despite rising U.S. / China tensions.

 

  • On Wednesday: European stocks closed on a strong note, buoyed by the European Commission’s plan to launch a massive recovery fund for the euro region to help limit the damage inflicted by the coronavirus pandemic.
  • US stocks saw further upside during the trading day. With the upward move on the day, the Nasdaq reached its best closing level in over three months, while the Dow and the S&P 500 ended the session at their best closing levels since early March.
  • Asian stocks ended mixed as worries about rising U.S.-China tensions offset optimism about the reopening of economies across the world.

Global Macro

  • Germany’s 10-year bond yield rose to -0.41% on Wednesday, its highest on a closing basis since April 14th, on easing fears over a European Union collapse after the European Commission proposed a EUR 750 billion recovery fund, of which EUR 500 billion in the form of grants and EUR 250 billion in loans. At the same time, Germany is expected to present a new stimulus package worth EUR 50 to 100 billion in the next week, with possible measures including support families with cash handouts of EUR 300 and abolition of the solidarity surcharge. It follows a EUR 750 billion rescue package agreed on March.
  • The People’s Bank of China (PBoC) held the borrowing cost on its seven-day reverse repo steady at 2.20 percent on May 27th, after resuming operations on the liquidity tool for a second straight day. The PBOC injected CNY 120 billion (USD 16.80 billion) via seven-day repos to keep banking system liquidity reasonably ample.
  • Mortgage applications in the United States rose 2.7 percent in the week ended May 22nd 2020, rebounding from a 2.6 percent fall in the previous week, data from the Mortgage Bankers Association showed. Applications to purchase a home increased 8.6 percent, the sixth consecutive weekly gain and a 54 percent rise since early April, while refinance applications declined 0.2 percent. Meantime, the average fixed 30-year mortgage rate went up 1bps to 3.42 percent.

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