NEW YORK, Jan 14 ― Treasury yields fell yesterday after Federal Reserve officials steered clear of tightening monetary conditions anytime soon despite expectations of higher inflation, while stocks and the dollar edged higher.
The US benchmark yield was on track to post its first full-session decline in 2021, even as a jump in gasoline prices pushed inflation higher last month. Consumer prices are expected to run hotter in a couple of months when March and April of 2020, which saw very low inflation, fall off the yearly reading.
Several Fed policymakers pushed back against the idea of the Fed tapering its asset purchases any time soon, however.
The climb in yields is expected to resume, partly due to a massive stimulus package from the incoming administration of Democratic President-elect Joe Biden, who takes office on January 20.
Stocks edged up as Europe was boosted by deals, and US tech stocks were supported by a change of leadership at Intel Corp, which jumped 7 per cent.
On Wall Street, The Dow Jones Industrial Average fell 8.22 points, or 0.03 per cent, to 31,060.47, the S&P 500 gained 8.65 points, or 0.23 per cent, to 3,809.84 and the Nasdaq Composite added 56.52 points, or 0.43 per cent, to 13,128.95.
The pan-European STOXX 600 index rose 0.11 per cent and MSCI's gauge of stocks across the globe gained 0.28 per cent.
Emerging market stocks rose 0.78 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.68 per cent overnight higher, while Nikkei futures rose 0.92 per cent.
The US dollar index rose for the fourth time in five sessions, still not far from near three-year lows hit last week.
The greenback has found support from expectations of a continued economic recovery in the United States, even as countries in Europe resort to lockdowns to fend off a second Covid-19 wave.
“You are seeing a continuance of the US outperformance trade,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.
The dollar index rose 0.357 per cent, with the euro down 0.42 per cent to US$1.2156 (RM4.91).
The Japanese yen weakened 0.11 per cent versus the greenback at 103.87 per dollar, while the British pound was last trading at US$1.3635, down 0.20 per cent on the day.
An auction of US$24 billion in 30-year bonds was well bid, further pressuring yields lower.
Benchmark 10-year notes last rose 13/32 in price to yield 1.0951 per cent, from 1.138 per cent late on Tuesday.
Oil prices fell as the threat of lower demand due to rising global Covid-19 cases outweighed support from a greater-than-anticipated drop in US crude inventories.
Governments across Europe announced tighter and longer coronavirus lockdowns and curbs. The global death toll was nearing 2 million, according to a Reuters tracker.
“While I see crude prices trading higher over the coming months, investors need to be mindful that the road to higher oil demand and prices will remain bumpy,” UBS oil analyst Giovanni Staunovo said.
US crude recently fell 0.6 per cent to US$52.89 per barrel and Brent was at US$56.04, down 0.95 per cent on the day.
Spot gold dropped 0.4 per cent to US$1,848.05 an ounce. Silver fell 1.38 per cent to US$25.22.
Bitcoin last rose 6.73 per cent to US$36,324.69. ― Reuters
