Markets cheered after the U.S. Treasury unveiled a long-anticipated plan to remove toxic assets from the balance sheets of financial institutions on Monday.
North American equity markets opened more than 2% higher after Treasury Secretary Timothy Geithner said the U.S. will spend as much as $1 trillion in what was called the Private Public Investment Program, but is being referred to as the Geithner Plan.
The plan involves creating five different public-private funds that will bid on toxic assets and sell them to the broader public. It will help banks clean up their balance sheets and is expected to generate interest from the private sector, Geithner said.
The Dow Jones industrial average was most recently up 158 points to 7436, the S&P 500 up 18 points to 787 and the Nasdaq up 30 points to 1487.
In Canada, the S&P/TSX composite index was up 273 points to 8779. The index was boosted by an all-stock takeover of Petro-Canada by Suncor Energy. Shares of Petro-Canada are up 20% while Suncor is flat.
In Europe, the Stoxx 50 was most recently up 32 points to 1798, the UK FTSE 100 up 29 points to 3871 and the German DAX up 47 points to 4115. The Japanese Nikkei closed up 270 points to 8216 and the Hang Seng Index gained 614 points to 13447.
As Treasury Secretary Timothy Geithner detailed the Public Private Partnership Investment Program, the U.S. dollar strengthened against the euro.
This week should help determine the veracity of the dollar selloff, and whether the current trend of 'weaker dollar-strong commodities/risk appetite' has any durability beyond the knee-jerk reaction of the FOMC, said Ashraf Laidi, chief currency strategist at CMC Markets.
The euro is down 0.0027 to 1.3556 against the U.S. dollar, down 0.0105 to 1.6748 against the Canadian dollar, down 0.0081 to 0.9308 against the pound sterling and is higher by 0.94 to 131.21 against the yen.
The pound sterling is up 0.0099 to 1.4564 against the U.S. dollar and up 0.0038 to 1.7992 against the Canadian dollar.
The Canadian dollar is up 0.0039 to 0.8093 against the U.S. dollar (1.2355 USD/CAD) and up 1.00 to 78.33 against the yen.
The U.S. dollar is up 0.85 to 96.80 against the yen and the Dollar Index is down 0.016 to 83.825.
WTI crude oil is up $0.20 to $52.27. The front month gold contract at the Chicago Board of Trade is down $4.70 to $951.00 per ounce.
In fixed income, U.S. two-year yields are up 0.8 bps to 0.87%, with five-year yields up 0.6 bps to 1.65%, 10-year yields down 2.2 bps to 2.61% and 30-year yields down 2.2 bps to 3.64%. The Eurodollar September 09 contract is up 1.0 tick to 98.79. The yield curve is flatter, with the 10/2-year spread down 3.2 bps to 173.34 bps.
Yields on two-year Canadian government bonds are up 2.0 bps to 1.03%, with five-year yields down 1.0 bps to 1.73%, 10-year yields down 1.6 bps to 2.72% and 30-year yields down 0.6 bps to 3.59%. The September 09 BAX contract is down 1.0 tick to 99.47.
In Germany, returns on two-year German bonds are down 1.7 bps to 1.30%, with five-year yields flat at 2.21%, 10-year yields up 1.4 bps to 2.99% and 30-year yields down 1.2 bps to 3.86%.
Yields on UK two-year bonds are down 3.4 bps to 1.31%, with five-year yields up 2.6 bps to 2.27%, 10-year yields up 3.6 bps to 3.06% and 30-year yields down 0.8 bps to 4.07%.
All data taken at 9:45 a.m. EDT.
By Adam Button, firstname.lastname@example.org, edited by Ernest Hoffman, email@example.com