“This is going to linger because the surge in equities since the election was due to expectations of lower taxes and infrastructure spending,” said Komal Sri-Kumar, president of Sri-Kumar Global Strategies.
Stocks hit their session highs Thursday after a CSPAN video from earlier in the month circulated on trading floors that some traders falsely interpreted as former FBI Director James Comey saying he was never pressured to end an FBI probe. In the video, however, Comey is answering a question specific to the U.S. Attorney General or “senior officials at the Department of Justice,” not Trump.
“You take obstruction out of the equation, then impeachment becomes moot,” said Andy Brenner, head of international fixed income securities at National Alliance Securities. “Hence risk on is running and vol is falling.”
To be sure, the move was first seen in the currency market, with the U.S. dollar rising against the pound and the euro, though it was not initially clear whether the video’s circulation is what triggered the broad move across markets.
“It’s very, very fraught with risk right now because nobody knows what the truth is. It seems very binary. There’s no guilt or we’re looking at impeachment,” said Boris Schlossberg, managing director of foreign exchange strategy for BK Asset Management.
Schlossberg said that it was the CSPAN video recirculating that triggered the move higher, but he did not agree with the sentiment that the video would help clear Trump.
Treasurys eased slightly paring gains made on Wednesday’s session. The benchmark 10-year note yield rose to 2.23 percent and the short-term two-year note yield advanced to 1.266 percent.
Treasurys staged their second-biggest rally of the year Wednesday, as expectations faded that Trump can get tax reform or fiscal stimulus through Congress this year, or maybe even next year.
In economic news, weekly jobless claims totaled 232,000, below the expected 240,000. Meanwhile, the Philadelphia Federal Reserve business index rose to 38.8 in May from 22.0 in April.