(Bloomberg) – Stocks and US futures have floated ahead of a major Federal Reserve meeting at which officials will deliver their prospects amid a burgeoning economic recovery that could fuel inflation. Treasury returns are at their highest level in more than a year.
The Stoxx Europe 600 index has changed little, with the increase in carmakers offsetting the decline in travel and leisure stocks. Futures on the S&P 500 fluctuated a day after the meter reached a record run. In Asia, South Korean stocks withdrew because Samsung Electronics Co. warned it was facing the effects of a ‘serious imbalance’ in semiconductors worldwide.
The ten-year Treasury yield held about 1.63% on day two of the Fed’s meeting, after a 20-year auction drew strong demand. The market implied inflation expectations are at 12-year highs. The dollar was stronger against most peers.
The Fed’s policy and outlook for Wednesday is at the heart of the global recovery. The rate markets are such that the central bank will increase borrowing costs sooner than the current guidance suggests. Higher inflation expectations increased bond yields and caused a reversal of growth in value equities. In a Bloomberg TV interview, bond investor Bill Gross predicted that inflation would rise to 3% to 4% in the coming months.
“The concern is that the assets that have worked best over the past decade – rates, credit of all kinds and long-term stocks – may no longer be the only games in town,” said Alliance Wernstein investment strategist David Wong.
Elsewhere, WTI crude rose to $ 65 a barrel. Bitcoin held about $ 56,000, below the weekend record above $ 61,000.
These are some key events this week:
Fed Chairman Jerome Powell is likely to reaffirm his firm stance at the Fed policy meeting on Wednesday. BOE is expected to leave monetary policy unchanged. Resolution of Japanese Monetary Policy and Governor Haruhiko Kuroda on Friday.
These are the main movements in markets:
Stocks
The future on the S&P 500 index changed little at 8:12 am London time. The Stoxx Europe 600 index has changed little. The MSCI Asia Pacific Index fell 0.2%. The MSCI Emerging Markets Index fell 0.4%.
Currencies
The Bloomberg Dollar Spot Index rose 0.1%. The euro fell 0.1% to $ 1,189. The British pound jumped 0.2% to $ 1.3919. The national yuan strengthened 0.1% to 6,502 per dollar. The Japanese yen weakened 0.1% to 109.16 per dollar.
Effects
The yield on 10-year treasury rose by one basis point to 1.63%. Yields on two-year treasuries rose by less than one basis point to 0.15%. Germany’s 10-year yield rose by less than one basis point to -0.33%. The annual return increased by two basis points to 0.802%. Japan’s 10-year yield fell by less than one basis point to 0.1%.
Commodities
West Texas Intermediate crude rose 0.6% to $ 65.17 a barrel. Brent crude rose 0.4% to $ 68.69 a barrel. Gold strengthened 0.2% to $ 1,735.19 per ounce.
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