US stocks traded mixed after the House passed President Biden’s $1.75 trillion ‘Build Back Better’ reconciliation bill and as European COVID concerns return. The spending bill received no votes from Republicans and one Democratic voted against it. The final scorecard was 220 to 213 and now the legislation goes to the Senate where it does not yet have the support from conservative democratic senators.
Risk appetite was non-existent for European equities as pandemic concerns resurface. Europe is a key part of the global economic recovery and that will remain a major headwind for US equities if more countries go into lockdown mode. Austria’s decision to enter a nationwide lockdown derailed the eurozone reopening trade.
The two sectors getting hit the hardest given the EU pandemic relapse are energy and financial stocks. The airlines are also dragging down industrials.
Global equities pared losses after reports that the German foreign ministry is not considering a national general lockdown.
Federal Reserve Governor Waller stayed true to his hawkish tendencies and noted that given the rapid improvement in the labor market and deteriorating inflating data, he favors a faster pace of tapering. He is concerned that inflation is becoming embedded into wage demand demands.
Fed Vice Chair Clarida helped Treasury yields pare losses after he said it may well be appropriate to discuss accelerating the taper at the December policy meeting. The two-year Treasury yield popped towards 0.50% following Clarida’s remarks.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.