Stocks and US futures have floated ahead of an important 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 shares retreated as Samsung Electronics Co. warned that it was facing the consequences 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 bond 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. Securities Investor Bill Gross predicts in a Bloomberg TV interview that inflation will 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 oil ran out to trades about $ 65 a barrel. Bitcoin held about $ 56,000, below the weekend record above $ 61,000.
LOOK: According to Allianz Global Investors, favorable macroeconomic conditions will continue to favor value stocks.
These are some key events this week:
- Fed Chairman Jerome Powell is likely to confirm his firm stance at the Fed policy meeting on Wednesday.
- Bank of England rate decision Thursday. BOE is expected to leave monetary policy unchanged.
- Decision on monetary policy of the Bank of Japan 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 08:12 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%.
- The yield on two-year treasury climbed by less than one basis point to 0.15%.
- The ten-year yield in Germany rose by less than one basis point to -0.33%.
- Britain’s yield for ten years rose by two basis points to 0.802%.
- The ten-year yield in Japan dropped 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.
– Assisted by Haslinda Amin