US stocks and futures drifted ahead of an important Federal Reserve meeting, at which officials will present their perspectives in the midst of an economic recovery that risks fueling inflation. Treasury yields have remained close to the highest levels in over a year.
The Stoxx Europe 600 Index opened little changed, with automakers’ gains offsetting declines in travel and leisure stocks. Futures on the S&P 500 fluctuated a day after the indicator hit a record high. In Asia, South Korean stocks have retreated as Samsung Electronics Co. has warned that it is battling the consequences of a “serious imbalance” in semiconductors worldwide.
The Treasury’s 10-year yield remained around 1.63% on the second day of the Fed meeting, after a 20-year bond auction attracted strong demand. The expectations of inflation implied in the market are at their peak in 12 years. The dollar was stronger against most major pairs.
The Fed’s policy and outlook updates, scheduled for Wednesday, are at the center of the stage as the global recovery gains momentum. The rate markets are positioned for the central bank to increase borrowing costs earlier than suggested by the current guidance. Higher inflation expectations boosted bond yields and generated a rotation of growth for value stocks. Securities investor Bill Gross predicted in an interview with TV Bloomberg that inflation will rise from 3% to 4% in the coming months.
“The concern is that the assets that have worked best in the past decade – fees, credit of all kinds and long-term stocks – may no longer be the only games in the city,” said David Wong, investment strategist at AllianceBernstein.
Elsewhere, WTI crude oil has sharpened until trade around $ 65 a barrel. Bitcoin stood at around $ 56,000, below the weekend’s record above $ 61,000.
WATCH: Favorable macroeconomic conditions will continue to benefit value stocks, according to Allianz Global Investors.
These are some important events this week:
- Fed Chairman Jerome Powell is likely to reaffirm his firm policy stance at the Fed’s policy meeting on Wednesday.
- Bank of England rate decision on Thursday. The BOE is expected to leave monetary policy unchanged.
- Bank of Japan monetary policy decision and Governor Haruhiko Kuroda briefing on Friday.
These are the main movements in the markets:
Stocks
- Futures 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 Market Index fell 0.4%.
Coins
- The Bloomberg Dollar Spot Index gained 0.1%.
- The euro fell 0.1% to $ 1,189.
- The pound sterling jumped 0.2% to $ 1.3919.
- The onshore yuan appreciated 0.1% to 6.502 per dollar.
- The Japanese yen weakened 0.1% to 109.16 per dollar.
Titles
- Yield on 10-year Treasury bills jumped a base point to 1.63%.
- Yield on two-year Treasury bills rose less than a basis point to 0.15%.
- Germany’s 10-year yield increased by less than a base point to -0.33%.
- Britain’s 10-year yield jumped two basis points to 0.802%.
- Japan’s 10-year income fell less than a basis point to 0.1%.
Commodities
- West Texas Intermediate crude advanced 0.6% to $ 65.17 a barrel.
- Brent crude rose 0.4% to $ 68.69 a barrel.
- Gold appreciated 0.2% to $ 1,735.19 an ounce.
– With the help of Haslinda Amin