S&P 500 futures and yields rise while US dollar drops on Fed's unlimited QE
- Asia is offering dollars on the Fed's open-ended easing plan.
- The US stock futures and the treasury yields are on the rise on hopes for a coronavirus spending bill.
The US stock futures are flashing green in Asia as markets are offering US dollars, possibly in response to the Federal Reserve's (Fed) open-ended asset purchase program.
At press time, the futures tied to Wall Street's benchmark equity index S&P 500 is reporting a 4 percent gain and the 10-year yield is currently seen at 0.827%, up over six basis points on the day.
Meanwhile, the dollar index, which tracks the value of the greenback against majors, is hovering at 101.65, representing a 0.80% gain on the day.
The stock futures and yields are rising amid increased expectations for a massive coronavirus spending bill. As per the Washington Post, the US Senate leaders and the Trump administration appeared closer to reaching an agreement on Monday evening on a massive spending bill that could inject $2 trillion into the economy to blunt the impacts of the coronavirus.
Meanwhile, the dollar is losing ground on the Fed's unlimited quantitative easing or asset purchases. The Fed, on Monday, said it will buy treasuries and mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions. Essentially, now there is no limit up to which the Fed can expand its balance sheet. The central bank's balance sheet expanded to a record high of $4.7 trillion last week.
The Fed's unlimited easing could continue to ease stress in the credit markets, leading to further weakness in the dollar.
The equity markets, however, may struggle if the US Senate leaders and the Trump administration fail to reach a bipartisan agreement.
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
