Global stocks rallied on Monday after a difficult week, getting a boost as bond yields dropped following a rapid ascent.
lost nearly 5% last week but futures actions was pointing to strong gains on Monday.
The gains in stocks came on relief over bond yields. The yield on the benchmark U.S. 10-year Treasury was 1.43%, down from as high as 1.55% last week. The Reserve Bank of Australia doubled its daily bond purchases to A$4 billion, sending yields on the Aussie 10 year sharply lower.
“Central bankers have started to push back on the idea of higher rates,” said Marshall Gittler, head of investment research at BDSwiss, pointing to both the Australian action as well as the comments made by leading European Central Bank officials.
“It looks to me like the moves in bond markets were much too fast, but perhaps not too far. That is to say, they were quite sudden, but the levels of yields, particularly at the long end, are not too high if we do get the kind of growth that many economists are forecasting.”
That growth optimism was reflected by the weekend approval of medical devices company
Johnson & Johnson
‘s single-dose Covid-19 vaccine by U.S. regulators.
Chairman and Chief Executive
also delivered an optimistic view in his shareholder letter, with the insurance-to-railroad conglomerate reporting stronger-than-forecast fourth-quarter earnings.
A key manufacturing gauge for February is due for release, as well as construction spending data.