Bye-bye Negative Rates
Japan’s two-year yield rose above zero for the first time since 2015, bringing the global era of negative yields closer to an end. The rate added as much as two basis points to 0.01% on Wednesday as the country’s debt extended declines after the central bank doubled its cap on 10-year yields on Tuesday. All other benchmark tenors have yields above zero and Bloomberg’s gauge of global negative-yielding debt only contains short-term Japanese bonds. The pool of global debt with sub-zero yields shrank to $686 billion Tuesday from more than $11 trillion at the end of 2021 as this year’s wave of global policy tightening sent bonds into the first bear market in a generation.
The European Union approved Germany’s nationalization of two major gas companies, but with a long list of conditions requiring both firms to sell off assets and subsidiaries. The EU authorized a €34.5 billion ($36.6 billion) rescue package for Uniper, the biggest in German history. It also approved the €6.3 billion rescue of SEFE Securing Energy for Europe GmbH, the former European trading and supply unit of Gazprom, under the condition it divests assets too. The nationalizations are part of a €200 billion package the German government put together to help companies and households cope with rising energy prices.
Elon Musk confirmed he will step down as CEO of Twitter after finding a successor, though he plans to retain control over the company’s engineering teams. “I will resign as CEO as soon as I find someone foolish enough to take the job!’’ he wrote in a tweet. The billionaire executive embarked on a search for a new CEO after losing a straw poll he posted on the social media site that asked whether he should relinquish his role as head of the company. Musk also pushed back on criticism from one of Tesla’s most vocal supporters amid growing concern about the CEO’s ability to manage Twitter and his other businesses.
Zelenskiy’s US Trip
Ukrainian President Volodymyr Zelenskiy will visit Washington on Wednesday, his first trip outside his country since Russia invaded 10 months ago, with plans to meet President Joe Biden and address Congress in person to rally support from a crucial ally. Zelenskiy will have the opportunity to appeal directly to Republican lawmakers skeptical of continued US aid. Congress is poised by the end of the week to send a $1.7 trillion fiscal 2023 spending bill to Biden that includes more than $45 billion to aid Ukraine.
European stock futures are trading higher after the S&P 500 snapped a four-day losing streak, providing a moment of relief for investors. Data to come out today include UK public sector net borrowing and German GfK consumer confidence. Carnival is among the companies expected to report results.
(Source: Bloomberg, Dec. 21-2022)