(Reuters) – A look at the day ahead in US and global markets from Mike Dolan
Wall St stocks and bonds have surged afresh, boosted by falling US Treasury borrowing estimates, a rising megacap earnings update and a Federal Reserve decision this week – a sharp contrast to another slide in China’s ailing markets.
There was a fresh rise in US assets late Monday after the US Treasury cut its estimate of first-quarter borrowing and refunding needs by $55 billion to $760 billion – mainly driven by surprisingly sharp growth and higher cash balances. Due to revenue.
Treasury also said it expects quarterly borrowing to slow sharply in the second quarter to $202 billion.
Fears over how the market will absorb the massive government borrowing schedule have had a significant impact on long-term borrowing rates over the past six months and have led to significant market reversals.
The latest refunding news – which will be followed on Wednesday with details of the debt auction size and maturity buckets – electrified the bond market late Monday and, in turn, triggered another sharp rally in stocks near expiration.
Ten-year Treasury yields fell to 4% in early trading Tuesday – the lowest level in two weeks.
And with two of the “Magnificent 7” of U.S. megacap stocks – Microsoft and Alphabet – reporting after the bell later today, the S&P 500 rose 0.8% to hit a new record high, offset by lower Treasury yields. .
It is now less than 1.5% short of the 5,000-point milestone and stock futures gave up most of Monday’s gains overnight.
Based on last week’s extraordinary confluence of news with US growth above 3%, unemployment below 4% and inflation coming close to the Fed’s 2% target, a good investment mood is spreading to small cap stocks as well – Russell With 2000…