Dow Streak Hits 12, Treasuries Fall on Rate Bets: Markets Wrap

  • Odds for interest rate hike in March rise past 50 percent
  • Investors look to Trump Tuesday speech for spending details

UBS' Baweja Says French Election Risk Is Overdone

The Dow Jones Industrial Average pushed its winning streak to the longest in 30 years, while Treasuries fell and the dollar advanced as the Trump administration began outlining its spending priorities in greater detail ahead of the president’s speech to Congress Tuesday.

The blue-chip stock index eked out a 12th straight gain to close at a record, as energy and industrial shares rose after Trump said he’d spend ‘big’ on infrastructure. The yield on the 10-year Treasury note climbed from the lowest close of the year, while Bloomberg’s dollar index turned green as the Fed Bank of Dallas president reiterated his view that rates should rise “sooner rather than later.” The implied odds for a Federal Reserve interest-rate increase next month rose to 50 percent.  

The White House began sketching its spending plans in an outline budget Monday as Trump said he has no choice but to spend on infrastructure, while adding that tax details won’t become clear until after the costs of repealing the Affordable Care Act are known. The Fed decision on rates is due in two weeks, with odds for a hike rising from 34 percent just five days ago.

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What’s ahead for this week:

  • In Trump’s address before a joint session of Congress on Feb. 28, the president is expected to lay out his plans for tax and health-care reform and infrastructure spending.
  • Investors will also be watching comments from Fed officials, including Chair Janet Yellen, who speaks at an event in Chicago at the end of the week.
  • This week’s economic data include U.S. personal income and spending. India and Australia will report on fourth-quarter GDP. China’s PMI data are expected to show continued expansion. Japan reports on factory output, housing starts and capital spending.

Here are the main moves in markets:
Stocks

  • The S&P 500 Index rose 0.1 percent to 2,369.73 at 4 p.m. in New York, after capping a fifth weekly gain. 
  • The Dow climbed 16.43 points to a record 20,838.19. The index has advanced just 3.9 percent during its longest rally since 1987. It’s fallen just three days in February.
  • Six of 11 main S&P 500 industries advanced, with energy producers pacing gains. Real estate and phone shares led declines.
  • The Stoxx Europe 600 Index lost 0.1 percent, extending Friday’s declines.
  • Deutsche Boerse AG dropped and London Stock Exchange Group Plc fell after LSE said the two companies’ merger plan is unlikely to proceed for regulatory reasons.

Currencies

  • The Bloomberg Dollar Spot Index added 0.1 percent, reversing a decline of 0.2 percent. The gauge fell 0.4 percent last week, its first drop in three weeks.
  • The pound weakened 0.2 percent to $1.2436.
  • The euro gained 0.2 percent to $1.0586, aided by a report showing economic confidence in the region at the highest level since 2011.

Bonds

  • Yields on 10-year Treasuries rose five basis points to 2.37 percent, reversing three straight days of declines. The move accelerated after noon amid heavy volume in futures, especially April fed funds and December eurodollars.
  • French 10-year bond yields dropped four basis points to 0.89 percent and peripheral debt also got a boost from improved risk appetite. German benchmarks added two basis points to 0.2 percent.

Commodities

  • WTI crude futures edged higher to settle at $54.05 a barrel, near the highest since July 2015.
  • Gold erased gains to trade 0.5 percent lower at 1,251.90 an ounce. The metal jumped 1.8 percent last week for its fourth straight weekly advanced.
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