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Major indeces down overnight, US bond yields remain sluggish
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TOKYO/NEW YORK - Global stocks eyed an all-time peak while the dollar and U.S. bond yields stayed sluggish on Friday on hopes a divided U.S. Congress would hinder large government borrowing, which could pave the way for even more central bank stimulus.
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Investors expect Democrat Joe Biden to beat President Donald Trump and the Republicans to retain control of the Senate, allowing them to block Democrat policy such as corporate tax hikes and debt-funded spending on infrastructure.
“With the prospects of fiscal stimulus constrained by a likely gridlock in Washington, monetary policy will likely have to do heavy lifting, boosting risk assets and putting pressure on the dollar,” said Hiroshi Watanabe, economist at Sony Financial Holdings.
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A sense a Biden presidency will be more predictable than Trump’s is also underpinning risk sentiment, even though investors saw no quick rapprochement between Washington and Beijing on trade and other issues.
MSCI’s all-country index of the world’s 49 markets inched up 0.05%, bringing its record peak hit in September within sight.