On Saturday, the much awaited $1.9 trillion US economic aid was passed by the Senate, providing aid to the central and state government and extending additional unemployment benefits. And the house controlled by the Democrat is likely to pass the bill as soon as this week itself. And the President Biden is likely to sign it into law on March 14.
The enthusiasm around it as the liquidity that will pour in into the markets will help boost the economic sentiment is favouring the markets. And simultaneously there is an impact seen on stocks and other assets as well. Here is the impact that is seen on an immediate basis:
In the Asian markets, there was seen a rally in Monday's early trade as they rejoiced the passage of a $1.9 trillion bill and also a better than expected US jobs data. Non-farm payroll number increased by 379,000 jobs last month, while the jobless rate dipped to 6.2% as a positive sign for incomes, spending and corporate earnings.
China's export also boomed 155 percent in the last month in comparison to last year's when there was shut down owing to the pandemic. The positive data gives hopes of a stronger recovery.
At the time of writing this copy, the Asian markets were trading mixed with Singapore's Straits Times up 1.71%, Hong Kong's Hang Seng weak by 1.08%, Japan's Nikkei up by 0.21%, South Korea's Kospi down by 0.11%.
The US stock futures were also trading mixed with both S&P 500 and Nasdaq futures down indicating that the recent weakness in tech stocks shall persist. SGX Nifty also at around 8:53 am was ruling lower.
While the greenback in the medium term shall see a pullback it has surged to a 3-month high on passage of the bill. BofA analyst Athanasios Vamvakidis argued the potent mix of U.S. stimulus, faster reopening and greater consumer firepower was a clear positive for the dollar, and a drag for bonds.
The crude oil has gone past levels of $70 per barrel mark after there were clashes and drones and missiles were hit at the Saudi Arabia's oil industry, which resulted in concerns over the production of the commodity. Brent climbed $1.09 a barrel to $70.45, while U.S. crude rose $1.08 to $67.17 per barrel.
The fresh round of government spending could further create ripple in the bond market, which after starting the year at below 1% was trading at 1.59%. The move is seen to already impact the equity markets, with flight of funds seen to other asset class.
Higher yield has already weighed on the precious yellow metal, reducing its appeal as it bears no interest income. And as per a Reuters report it was left at $1,706 an ounce, just above a nine-month low.