FXstreet.com (Barcelona) - Wall Street, having bought the rumor
of a fiscal deal on Monday, also bought the fact on Wednesday. The
S&P500 added +1.8% to Monday's +1.7% gain with 30 minutes of
trade remaining, though best levels of the day (so far) were seen
almost immediately after the market open. The DJIA also added 1.8%
and the NASDAQ is +2.6% higher.
Nobody seems to be under any illusion that we can avoid a re-run of
the past few weeks' fiscal shenanigans come February including, of
course, rankling over the debt ceiling. Senate minority leader
) who helped broker the deal passed by Congress yesterday, has just
said that the debt ceiling debate is a chance to confront spending.
However, "the view that the risk rally has some more legs in the
early part of January is also very prevalent." warns the NAB
Benchmark/core bond yields have predictably spiked in both Europe
and the US, 10 year Treasury yields 8bp higher and German 10 years
up a full 13bp. Note euro-peripheral spreads have collapsed by
between 20 and 30bps. In this context, the surprise is that the
euro has actually lost ground to the USD. The AUD is still the best
performing G10 currency of the past 24 hours, largely maintaining
yesterday's local session gains to stand just shy of 1.05 albeit
back from an o/n high of 1.0524.