Treasuries pare gain, US stocks mixed after US Fed rate hike
New York: Treasuries pared gains and the dollar trimmed losses versus the euro after Federal Reserve Chair Janet Yellen suggested weak readings on inflation won’t persist amid a tightening labour market as the central bank continues its path of tightening. Most US stocks fell.
The 10-year Treasury note yield trimmed a drop by three basis points and the dollar cut its losses in half. Both notched deeper declines earlier after consumer price data came in below forecasts, sowing doubt about the strength of the US economy. Yellen said recent weak data is “transitory.” The S&P 500 Index turned lower as the chair spoke.
“The Fed has said in the minutes that they’re trying to reach a balancing act between GDP, inflation and unemployment,” said John Augustine, chief investment officer for Huntington Trust in Columbus, Ohio, which oversees $17 billion. “Markets perceive they’re going to be very thoughtful in how they do that, and that’s how they’re reacting.”
Policy makers agreed to raise their benchmark lending rate for the third time in six months, maintained their outlook for one more hike in 2017 and set out some details for how they intend to shrink their $4.5 trillion balance sheet this year. Chair Janet Yellen will hold a press conference at 2:30 pm.
Central banks in Japan, Switzerland and Britain are also scheduled to weigh in with policy decisions this week. Investors have reined in expectations for a Bank of England interest-rate increase after the election shock.
Markets largely ignored a shooting that wounded the third-highest ranked U.S. House Republican and at least four others at a congressional baseball practice in Alexandria, Virginia. The gunman later died from injuries in a shootout with police. Bloomberg