Onward And Upward?

Global equities hit new highs Tuesday as markets saw no reason to fade the steady grind higher into 2021.

The fate of $2,000 stimulus checks in the US was in the hands of the GOP-controlled Senate, where legislation goes to die. The House moved forward with Donald Trump’s demands for larger direct payments Monday, but the idea wasn’t expected to get much traction in the Republican-led chamber, even as a vote against the measure is a vote against Trump and a vote against a politically popular idea — namely, free money for the people.

“There’s strong support for these $2,000 emergency checks from every corner of the country,” Chuck Schumer said, a statement. 44 House Republicans backed the larger checks. But skepticism about the effectiveness of the payments runs deep among the GOP, even as their line of argumentation misses the point and is usually an exercise in question-begging.

“Nothing in this bill helps anybody get back to work,” Kevin Brady remarked. That’s (mostly) correct. But if people were working, they wouldn’t need $2,000, would they, congressman?

In any event, the MSCI All-Country World is headed for another month of gains coming off one of the most spectacular monthly rallies in history in November.

Helping matters along is the dollar, which is headed for another month of losses. A weaker dollar is generally a positive development for global risk sentiment, and the greenback is pacing for a second monthly decline in excess of 2%. The dollar fell against all G-10 peers Tuesday, as haven bids evaporated amid stimulus optimism.

In the UK, the first full day of trading since the Brexit deal found domestic equities surging more than 2%. The index was tracking for its best close in nine months.

This was met with quite a bit of boilerplate commentary, but when it comes to UK assets, and especially the pound, one FX analyst who spoke to Bloomberg put it best: “Having to [price things] with thin liquidity is like trying to hit a moving target. We [won’t] really see the true post-Brexit level until markets fully return on January 4.”

And that’s true more generally. Remember: This is still a holiday week, and it’s a blessing that New Year’s Day is followed immediately by a weekend.

Because there won’t be much in the way of time for market participants to nurse any hangovers in the first week of 2021. The Georgia runoffs beckon as does a veritable deluge of top-tier US data for December, a month during which virus cases and deaths surged across the world’s largest economy.

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