Zero Hedge
December 18, 2017
Global stocks and US equity futures roared upward to new record highs to start the second-to-last week of the year, boosted by optimism over a Republican agreement on the shape of U.S. tax cuts aimed at lifting growth; incidentally this is the 6th consecutive day that the “tax bill” has been priced in by the market, and according to cynics, 6th consecutive week and/or 6th month. Meanwhile, the dollar dropped and Treasuries headed lower.
World stock markets have surged this year, for the most part on constant expectations of tax reform passing, which is expected to boost corporate profits but mostly trigger share buybacks and higher dividend payouts, to the tune of over $1 trillion. The benchmark MSCI World index rose 0.41% on Monday to hit a fresh record high, putting it on course for its best year since 2009.
In overnight cross-asset developments, it was a low-volume session as traders close out the year, which saw the dollar fall against most G10peers Monday alongside Treasuries as focus remained on Trump’s tax measures. The pound climbed ahead of a speech by PM May. While core euro- area bonds were little changed, peripheral debt from Italy and Spain climbed. Portugal’s bonds rallied, with 10-year yields sliding to the lowest since April 2015 after Fitch Ratings raised the country’s credit ranking two notches to investment grade late on Friday. Portugal’s 10Y bond traded decisively below its Italian equivalent on Monday. The last time it did so for a sustained period was in early 2010. “There is very much a shift in the architecture in the European government bond market,” said DZ Bank rates strategist Daniel Lenz.
Europe’s Stoxx 600 Index rose for the first time in three sessions as real estate, automakers and technology stocks led gains. Germany’s DAX index rose 1.2 percent, with the U.K.’s FTSE 100 up 0.5 percent. Most European…