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(Bloomberg) – U.S. stocks and futures have drifted ahead of a key Federal Reserve meeting where officials will present their outlook amid an emerging economic recovery that threatens to fuel inflation. Yields on Treasuries have held close to their highest levels in over a year.
The Stoxx Europe 600 index was little changed, as gains by automakers offset declines in travel and leisure shares. Futures on the S&P 500 fluctuated a day after the gauge broke a record. In Asia, South Korean stocks retreated as Samsung Electronics Co. warned it grappled with the fallout from a “serious imbalance” in semiconductors globally.
The 10-year Treasury yield held around 1.63% as day two of the Fed’s meeting approached, after a 20-year bond auction sparked strong demand. Market implicit inflation expectations are at 12-year highs. The dollar was stronger than most of the major peers.
The Fed’s policy and outlook updates scheduled for Wednesday take center stage as the global recovery gains momentum. Rate markets are positioned for the central bank to increase borrowing costs sooner than current forecasts suggest. Higher inflation expectations boosted bond yields and triggered a rotation from growth stocks to value stocks. Bond investor Bill Gross predicted in an interview with Bloomberg TV that inflation will drop from 3% to 4% in the coming months.
“The problem is, the assets that have performed best over the past decade – rates, credit of all kinds and long-term stocks – may not be the only games in town anymore,” said David Wong, Investment Strategist at AllianceBernstein.
Elsewhere, WTI crude oil edged up to trade around $ 65 a barrel. Bitcoin held at around $ 56,000, below the weekend high above $ 61,000.
Here are some key events from this week:
Fed Chairman Jerome Powell is likely to reaffirm his consistent political stance at the Fed’s policy meeting on Wednesday. Bank of England rate decision Thursday. The BOE is expected to leave monetary policy unchanged. Bank of Japan monetary policy decision and Governor Haruhiko Kuroda briefing on Friday.
Here are the main movements in the markets:
Stocks
Futures contracts on the S&P 500 index were little changed at 8:12 a.m. London time, the Stoxx Europe 600 index was little changed, the MSCI Asia Pacific index fell 0.2%. The MSCI Emerging Market index fell 0.4%.
Currencies
Bloomberg Dollar Spot Index gained 0.1%, the euro fell 0.1% to $ 1.189, the British pound jumped 0.2% to $ 1.3919, the onshore yuan strengthened rising 0.1% to 6.502 per dollar, the Japanese yen was down 0.1% to 109.16 per dollar.
Obligations
The yield on 10-year Treasuries jumped one basis point to 1.63%. The yield on two-year Treasuries climbed less than a basis point to 0.15%. Germany’s 10-year yield rose less than a basis point to -0.33%. – the annual yield jumped two basis points to 0.802%. Japan’s 10-year yield fell less than a basis point to 0.1%.
Basic products
West Texas Intermediate crude rose 0.6% to $ 65.17 per barrel, crude 0.4% to $ 68.69 per barrel, while gold rose 0.2% to $ 1,735.19 per ounce.
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