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The global bond selloff continues, Trump starts to announce his team, and it was a big weekend for deals. Here are some of the things people in markets are talking about today.
This morning, the yield on the U.S. 30-year Treasury rose to 3 percent for the first time since January, as the global bond rout that followed Donald Trump’s victory in the U.S. presidential election continues apace. Long-dated bonds are also getting hit hardest in Europe, with Italy’s 50-year among the biggest losers. The jump in yields may be a message to the president-elect from the bond market on his plans to expand public debt to fund infrastructure investment, with the moves serving as a reminder of how “bond vigilantes” famously curtailed Bill Clinton’s spending plans during his first term. Goldman Sachs Group Inc. has warned that Trump’s policies risk pushing the U.S. economy into a period of stagflation.
The president-elect may not be listening to those vigilantes at the moment, however, as he is busy putting together his White House team. Yesterday, he announced RNC Chairman Reince Priebus as his chief of staff, and former Breitbart News Executive Chairman Steve Bannon as chief strategist and senior counselor. The two are expected to work together as “equal partners,” which is seen as an attempt by Trump to balance the expectations of his supporters and the needs of Washington. Over the weekend, the president-elect also watered down some of his more controversial campaign promises by saying that parts of the famous border wall with Mexico may be a fence, and that same-sex marriage is settled law.
There are several multi-billion dollar deals in the news this morning. In Asia, Samsung Electronics Co. agreed to buy Harman International Industries Inc., a supplier of audio equipment to the automotive industry, for $8 billion, in a move that is seen as an attempt by the South Korean giant to shift away from its reliance on smartphones. In Europe, Novartis AG is said to be in talks to acquire U.S. generic-drugs maker Amneal Pharmaceuticals LLC in a deal which could value the closely-held company at as much as $8 billion. Siemens AG, meanwhile, agreed to buy software company Mentor Graphics Corp. for $4.5 billion, a premium of 21 percent on Friday’s closing price.
Overnight, the MSCI Asia Pacific Index dropped 0.4 percent, while Japan’s Topix indexgained 1.6 percent after GDP data was better than forecast and the yen dropped to a five-month low. In Europe, the Stoxx 600 Index was 0.9 percent higher at 5:23 a.m. ET with banks accounting for most of the gains. S&P 500 futures added 0.4 percent.
China data, Japan GDP
There were no signs of the Chinese economy losing steam in figures published overnight. Industrial production rose 6.1 percent, retail sales grew 10.1 percent, and fixed-asset investment added 8.3 percent as domestic drivers eased concerns over the possible impact of a Trump presidency on the economy. Japanese GDP surprised, expanding anannualized 2.2 percent, far ahead of expectations for 0.8 percent, with a rebound in exports leading the gains. In the U.S. later this week, investors will get a slew of data to ponder including retail sales, housing starts, and Consumer Price Inflation.
What we’ve been reading
This is what’s caught our eye over the weekend.
- Odd Lots Podcast: Make inflation great again.
- China pumps the brakes on U.S. dealmaking after Trump’s win.
- The oil man who foresaw a crash sees OPEC uniting in self-interest.
- Brexit has already cost U.K. businesses $82 billion.
- Duterte outbursts are starting to scare U.S. companies.
- A casino at the end of the world may be the most successful ever.
- New Zealand spared widespread destruction after quake kills two.
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