Stocks were mixed Wednesday and Treasury yields declined as traders weighed economic risks from tighter monetary policy while awaiting key US data as well as the latest Federal Reserve minutes.
MSCI Inc.’s Asia-Pacific share gauge fell for a third day, sapped by Japan. US futures fluctuated and European contracts rose. Energy and financials helped the S&P 500 eke out a gain overnight, while the Nasdaq 100 extended a drop. A slew of reports are due later on US economic activity and the cost of living.
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A climb in Treasuries unwound much of their overnight slide. The prospect of the Fed reducing stimulus more quickly to fight price pressures has tempered bond market inflation expectations, though they remain historically elevated.
New Zealand’s currency sank after the nation raised interest rates to 0.75% to curb price pressures, a smaller move than some had expected. The central bank projected 2% benchmark borrowing costs by the end of 2022.
Damping inflation is now center-stage for policy makers, posing a test for markets as ultra-loose, pandemic-era monetary settings are tightened. The US data and the Fed minutes will give investors a read on price pressures and the economic recovery, potentially buffeting markets.
One key topic for the minutes would be “discussions around the criteria for a quicker taper of asset purchases,” Carol Kong, a strategist at Commonwealth Bank of Australia, wrote in a note. Inflation trends suggest the Fed needs to start tightening sooner that presently signaled, Kong added.
Oil gained as a planned coordinated release of strategic reserves by the US and other nations fell short of expectations. Gold gained slightly but remains under pressure from higher yields.
Here are some key events this week:
- US FOMC minutes, consumer income, wholesale inventories, new home sales, GDP, initial jobless claims, US durable goods, University of Michigan consumer sentiment. All Wednesday
- Bank of Korea policy decision Thursday
- US Thanksgiving Day: US equity, bond markets closed Thursday
- Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event. Thursday
Some of the main moves in markets:
- S&P 500 futures were little changed as of 6:53 a.m. in London. The S&P 500 rose 0.2%
- Nasdaq 100 futures rose 0.2%. The Nasdaq 100 fell 0.5%
- Japan’s Topix index was down 1.2%
- South Korea’s Kospi lost 0.1%
- Australia’s S&P/ASX 200 Index fell 0.2%
- Hong Kong’s Hang Seng Index rose 0.5%
- China’s Shanghai Composite Index rose 0.1%
- Euro Stoxx 50 futures rose 0.3%
- The Japanese yen was at 114.93 per dollar, up 0.2%
- The offshore yuan was at 6.3884 per dollar
- The Bloomberg Dollar Spot Index was flat
- The euro was at $1.1245
- The yield on 10-year Treasuries fell three basis points to 1.63%
- Australia’s 10-year bond yield was at 1.86%
- West Texas Intermediate crude was at $78.89 a barrel, up 0.5%
- Gold was at $1 793.09 an ounce, up 0.2%