US Close: Mixed session, Covid concerns return to EU, Fed to consider faster taper

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.

Fed

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.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya