Financial Markets Daily Report14 January 2021
Volatility declined and stock markets advanced moderately in a session dominated by news of fresh extensions to coronavirus lockdowns in Europe and China.
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- Volatility declined and stock markets advanced moderately in a session dominated by news of fresh extensions to coronavirus lockdowns in Europe and China.
- The Netherlands extended the nation's lockdown by three weeks, while Angela Merkel announced that Germany's restrictions would last another eight to 10 weeks. In China, three cities in the Hebei province have been locked down.
- In fixed income markets, the reflation trade that had pushed U.S. sovereign yields up in the last few days lost momentum and 10-year yields fell 5bp following the auction of $24bn worth of 30-year bonds.
- Euro area sovereign yields declined across the board as ECB's Isabel Schnabel warned against premature monetary and fiscal tightening, which could derail the recovery. Italian spreads were little changed after the ministers from a small party (Renzi's Italia Viva) pulled out of the government coalition –compromising its parliamentary majority.