Global Yields Continue to Soar in the Wake of a Trump Victory

Global yields continued their ascent as stocks extended their rally in the ongoing position adjusting in the wake of the Trump victory. Emerging market bonds led the erosion in Asian bonds while the periphery paced the losses in Europe. Greece saw the largest losses dropping nearly 22 basis points. The 10-year Treasury rate rose 15 basis points to test 2.30%. Stocks are mixed with the core and UK higher but most of the periphery lower. The dollar was firmer too, as stronger U.S. yields continue to drive the greenback. Data was light. Japanese GDP posted a gain, helping underpin the surge in the Nikkei.

Oil prices are down for a third straight session, with WTI showing a 1.5% decline at $42.77. The low so far today is $42.69, which is the lowest level seen since September 20, the day the Algiers Accord outlined coordinated production cuts by OPEC and some non-cartel producers. The planned cut is to be finalized on November 30, but markets are seeing too little commitment from too few countries for the plan to be credible. The NYMEX benchmark is now down by 5% since last week at the same time and by 15.0% over the last month, though remains up by 15.3% on the year-to-date.

Copper futures gained 11% last week following the Trump victory, and prospects for huge infrastructure spending in the New Year. Prices up a much as 3% on the session earlier, topping at $2.734, a 17-month peak. Iron ore prices topped two-year highs. Meanwhile, gold futures fell to five-month lows, bottoming at $1,212.00/ounce, as prospects for more aggressive and frequent Fed rate hike moves sets in.

Trump is beginning to name his cabinet, but the President elect continues to see protests following his surprise victory last week.  Trump named Republican National Committee Chairman Reince Priebus as his chief of staff, who is considered a political insider which suggests a more conventional approach to governing

Eurozone September industrial production contracted -0.8% month over month, not quite as much as feared and with August revised up to 1.8% month over month from 1.6% month over month. This helped to lift production 0.4% quarter over quarter in Q3, up from -0.3% quarter over quarter in the second quarter of the year, which backs expectations for a confirmation of the quarterly GDP growth rate at 0.3% for Q3. Looking ahead confidence indicators are looking encouraging, but Brexit and now the changed political situation in the U.S. add considerable uncertainty.

Italian October HICP was confirmed at -0.1% year over year. Of the big four Eurozone countries, only the Italian headline rates remains stuck in negative territory and with growing concerns about the political outlook as the constitutional referendum is looming, Italy remains the weakest link at the moment.