Treasuries Climb on Fed Speculation; Stocks Steady

09/11/2021 U.S. Treasury yields slipped Tuesday amid speculation about the leadership of the Federal Reserve, while stocks were mixed as a global equity rally paused. Treasuries rose following a report that Fed Governor Lael Brainard was interviewed for the top job at the U.S. central bank. Some commentators argue the Fed would be more dovish under Brainard. Meanwhile, the yield on 30-year Treasury inflation-protected securities slid to a record low, a sign of ongoing concerns about inflation risks in the global economy.
MSCI Inc.’s Asia-Pacific gauge was little changed, while U.S. and European futures retreated. The S&P 500 eked out a gain overnight to post its longest winning run since 2017 but a drop in Tesla Inc. weighed on the Nasdaq 100. The Federal Reserve in a report warned asset prices could slide if sentiment sours.

Bitcoin trades above $ 68400, new record high.

Locally the JSE All Share closed up 0.33% as the rand reached its best level in 12 days as risk sentiment globally picked up after promising employment numbers in the US and as most central banks kept their rates unchanged last week. The ZAR is currently trading at R 14.93/$ and R 20.26/GBP. INP and INL were the best performers closing up 7.61 and 6.76 percent respectively, closing at their best levels since Sept 2018. We should see a softer start to our day as Tencent trades down 0.43%, US and European futures are lower and Asia is softer across the region. IG Top 40 is down 213 points.

• Eskom Plans Another Week of Rolling Blackouts, Level 4
• S. African SARB Govt Bond Holdings Fall to 40.24b Rand in Oct.
• MultiChoice Sees 1H Trading Profit Rising, Earnings Falling
• South Africa’s Sasol Buys Okwuibome From Vitol
• Telkom Soars After MTN Said to Have Made Takeover Approach
• Fight or flight: SAA, Mango practitioner clash over low-cost airline’s rescue plan
• ANC out in the cold: Ruling party turns to EFF as DA, IFP and GOOD reject coalition talks

• Telkom SA TKG SJ

The Rest of this Week:

• China’s Communist Party’s decision-making Central Committee meets through Thursday
• Federal Reserve Bank of San Francisco President Mary Daly speaks Tuesday
• China aggregate financing, money supply, new yuan loans Tuesday
• China PPI Wednesday
• U.S. wholesale inventories, CPI, initial jobless claims Wednesday
• U.S. bond marked is closed in observance of Veterans Day Thursday
• China holds its annual Singles’ Day, the world’s biggest shopping festival, when e-commerce giants like Alibaba and Inc. lure buyers with bargains Thursday

In Europe, the pan-European Stoxx 600 closed slightly above the flatline in lacklustre trade, basic resources stocks gained 1.3% while travel and leisure shares sank 1.1% as sectors pointed in opposite directions. FTSE – 0.05%, DAX – 0.05%, CAC + 0.09%

In the U.S all three major averages rose to new highs. The Dow gained about 104 points, or 0.29%, posting its 44th record close of the year. The S&P 500 added 0.09% and closed above 4,700 for the first time. The move pushed the broad equity index to its 64th record close of 2021. The Nasdaq Composite advanced 0.07% to post its 11th straight positive session, the longest daily winning streak since December 2019. The tech-heavy index registered its 44th record close of 2021. Infrastructure-related stocks were among Monday’s biggest winners after the House passed the spending package on Friday evening. Materials was the top-performing S&P group, rising 1.23%, while the industrials sector closed at a record.
Strong earnings results have also supported stocks in running to new highs. Through Monday morning 445 S&P 500 components have reported quarterly results, with 81% beating earnings estimates. When it comes to revenue, 76% of companies have exceeded expectations.

Asian markets are mixed this morning following overnight gains on Wall Street that took the major indexes to record closing highs.

Oil has dipped a tad lower this morning after yesterday’s 0.8% gains, that were helped by U.S. President Joe Biden’s long-delayed $1 trillion infrastructure bill which passed through Congress at the weekend and better-than-expected Chinese exports helped paint a picture of a more expansive global economy. Brent – 0.07% $ 83.36, WTI – 0.02% $ 81.91.

Gold prices are steady this morning, consolidating near a two-month high scaled in the previous session, as a weak dollar offset firm U.S. bond yields. The precious metal hit its highest since Sept. 7 on Monday as the dollar softened and major central banks signaled inflation would likely fade and immediate interest rate hikes were not required. Gold Spot – 0.04% $ 1823, Platinum – 0.57% $ 1053 and Palladium – 1.17% $ 2052.