Tokyo's main index pare gains to end the day lower
- Session high 22,444.65
- Session low 21,996.94
Investors and traders are still digesting the results of the US midterm elections and so far equities are looking rather flattish and mixed. Asian stocks were mostly higher early on but have now pared gains on the day. Meanwhile, E-minis are also trading flat at the moment.
Democrats taking over the House while Republicans hold the Senate means that we could be set for more Congressional gridlock on certain policies. But it's hard to see anything change in the grand scheme of things. It means that we're going see Trump encountering a tough time to push forward with more tax cuts ahead of 2020 but it doesn't change the more pressing issue of trade.
The possibility of more fiscal discipline and a lesser deficit is what is helping lift Treasuries so far but there's no certainty that things will actually change in that regard. With the Fed still looking to hike further, yields should return higher sooner rather later.
The lower yields so far is what is weighing on yen pairs today but as is the case for USD/JPY, there's no resounding break below the 113.00 level. And that's suggestive that we're not headed for an overwhelming change in risk appetite just yet.
