While Treasury yields pushed higher following the steep decline the day before, global equities and the currency rose on Wednesday as House Republicans advanced US President Donald Trump’s tax reform plans.
Trump’s $4.5 trillion tax cut plan was just barely approved by the Republican-controlled US House of Representatives late Tuesday. The budget resolution will now be submitted to the Senate, where Republicans are anticipated to consider it.
Lars Skovgaard, senior investment strategist at Danske Bank, said it mainly benefits corporate US clients. Tax reductions and fewer regulation are anticipated. I would anticipate it happening, and if it does, the markets will benefit. Following news that the US and Ukraine had agreed on the outlines of a draft minerals deal, sentiment also brightened.
Following a volatile session on Wall Street, US stock futures recovered, with S&P 500 futures up 0.5% and Nasdaq futures up 0.7%. European stocks increased for a second day, with blue-chip indexes in Frankfurt, Paris, and London climbing 0.7% to 1.7% and the pan-continental STOXX 600 up 1% to a new record.
Tony Sycamore, an IG market analyst, stated that “the plan went through a little bit faster than people expected. As investors expect more debt issuance in the future, US Treasury yields increased little. The benchmark 10-year yield was up 1 basis point at 4.306% after dropping nearly 10 bps on Tuesday. Sensitive to shifts in Federal Reserve rate forecasts, the two-year yield increased by around 2 basis points to 4.119%.
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