US equities trade in positive territory after a surge on the back of fiscal cliff optimism lifted all of the indices, with the e-mini S&P trading at its highest levels since mid October. Budget talks between Republicans and Democrats seem to be progressing with both sides making public concessions with regard to the earnings threshold for tax hikes, a move toward common ground. Commentary regarding the negotiations also indicated that a deal could be reached by the end of the week, investors have responded positively to clarity in the context of the talks as it looks as though a deal will soon be made. In terms of stocks 9/10 sectors in the S&P are in the green led by Oil & Gas with gains of 1.85% partly thanks to Baker Hughes who have seen gains of almost 5%. Technology is also up with Seagate seeing gains of 1.5% and Apple gaining 2.30%. T-notes are down following risk off sentiment seen across asset classes, also contributing to the move to the downside was a lacklustre 5y note auction.
EUR/USD trades at the highest levels since May, seeing strength following USD weakness after fiscal cliff negotiations inspired risk on sentiment. GBP/USD trades with gains of 50pips, falling slightly short of September highs of 1.6258. The recovery in the currency was assisted by sovereign demand into year-end.
WTI and Brent crude futures trade in positive territory following risk on sentiment observed across asset classes assisted by USD weakness. Participants are looking ahead in the session to API Inventories due at 2130GMT.
Print 18:35, 18 Dec 2012 - Economic commentary - Source: RANsquawk
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