Helping the tone was a well-received 30-year Treasury auction late Tuesday, healing wounds associated with a dire reception for the previous long bond sale in November.
A 12-year-high so-called pricing “tail” – where the highest yields at which the bonds are sold top pre-auction indications – disappeared once again.
At 4.28%, 30-year yields were almost 10 bp down from Monday’s peak. The dollar was higher across the board, touching one-month highs against China’s offshore yuan.
And Wall St stocks ploughed on – hitting new 20-month highs, up more than 13% in six weeks and less than 4% from all-time highs for the S&P500. Futures were higher again before Wednesday’s bell.
Implied volatility continued to crater – dropping below 12 at one point for the first time since January 2020.
Overseas stocks were more mixed – higher in Europe ahead of the European Central Bank and Bank of England policy decisions on Tuesday, but lower in Asia where storm clouds continue to hover over China.
The blue-chip CSI 300 Index fell back 1.7% and Hong Kong’s Hang Seng slipped 0.9% as investors were disappointed by the lack of specific property market supports in the government’s latest economic stimulus plans.
China’s Central Economic Work Conference will next year focus on efforts to spur domestic demand, state media said, but the lack of focus on the smoldering real estate bust is a concern for many.
In Britain, data showed the economy contracted more than forecast in October, raising the risk of a recession and testing the BoE’s resolve to stick to its tough anti-inflation line.
And representatives from nearly 200 countries agreed at the COP28 climate summit on Wednesday to begin reducing global consumption of fossil fuels to avert the worst of climate change, a first-of-its-kind deal signaling the eventual end of the oil era.
