World stock markets stumbled just below recent record highs while U.S. Treasury yields held near multi-month peaks on Wednesday, December 20, as the final procedural throes of long-awaited U.S. tax reform played out in Washington.
MSCI’s world equity index .MIWD00000PUS, which tracks shares in 47 countries, was little changed and holding just below record highs hit on Monday.
The Republican-led U.S. Senate approved the sweeping $1.5-trillion tax bill in the early hours of Wednesday. A re-vote by the House of Representatives was scheduled for later in the day, with approval expected, and the bill will then go to President Donald Trump to sign into law.
European stock markets nudged lower , with blue-chip indexes in Germany .GDAXI, France .FCHI and Britain .FTSE flat to a touch weaker on the day.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS bobbed lower in a choppy session, while Japan’s Nikkei index .N225 finished up 0.1 percent.
U.S. Treasury yields, which notched up their biggest one-day jump in almost three months on Tuesday as the tax bill moved towards passage, steadied at around 2.46 percent US10YT=RR — holding near the previous day’s highs.
“Last week the reaction of bond markets was one of ambivalence about the likelihood of these measures getting passed,” said Michael Hewson, chief market analyst at CMC Markets in London.
“However, U.S. yields have jumped sharply higher in the last two days as the prospect of higher inflation and growth prompted some positioning adjustments in anticipation that the measures, if passed, could prompt conditions that might see rates have to rise faster than expected next year.”
Europe’s bond markets were also nursing losses after a heavy selloff on Tuesday that saw Germany’s long-dated yields DE30YT=TWEB rise to three-week highs after the euro zone’s benchmark bond issuer announced plans to issue more longer-dated debt next year.
The euro got a lift from higher euro zone rates, gaining 0.5 percent on Tuesday, when central bank governors of Estonia, Slovakia and Germany all discussed the need to shift the debate from bond purchases to other tools such as interest rates.
“That’s re-igniting the debate about ECB tightening, so despite the outlook for the U.S. tax bill passage, euro-dollar is strong right now,” Masafumi Yamamoto, chief currency strategist for Mizuho Securities in Tokyo.
Against a basket of six rival currencies, the dollar was a touch lower on the day at 93.418 .DXY.
The greenback edged down 0.2 percent to 113.11 yen JPY=, while the euro was a touch firmer at $1.1850 EUR=.
Bitcoin was almost 4 percent lower on the Bitstamp exchange at $17,007 BTC=BTSP, after earlier losing almost one-fifth of its value from a peak hit just three days ago.
Sweden’s crown briefly surged as much as 1 percent EURSEK=D3 after the central bank kept rates unchanged but said it would reinvest coupons and cash from maturing bonds, including bringing forward some reinvestments into 2018, Reuters reports.
