LONDON: World markets offered a muted reception on Thursday to the passage of U.S. tax cuts as potential benefits to company bottom lines were already priced in, while bonds were spooked by the blowout in government debt needed to fund the giveaways.
An election in Catalonia, which has become a de facto referendum on its independence movement, was another test for European assets late in the year, though there was only modest stress in Spain’s markets and none on the euro.,
“It (the Catalan election) cannot be ignored going into year-end,” said Orlando Green, European fixed income strategist at Credit Agricole. “But the secession movement has been significantly diminished and would need a decisive move to revive it.”
In U.S. President Donald Trump’s first major policy win, Republicans steamrollered opposition from Democrats to pass a bill that slashes taxes for corporations and the wealthy while giving mixed, temporary relief to middle-class Americans.
Having spent more than a year anticipating the bill, its actual passage proved something of an anticlimax for Wall Street. The Dow .DJI fell 0.11 percent, while the S&P 500 .SPX lost 0.08 percent and the Nasdaq .IXIC 0.04 percent.
Most of the action was in bond markets where yields on U.S. 10-year notes US10YT=RR jumped to the highest since March at 2.50 percent, in the process making a bearish break of a key chart level at 2.47 percent.
Benchmark German and euro zone yields were camped near one-month highs too and the swing higher in long-term yields for once outpaced the move in the short-end and steepened the yield curve a little.
