NEW YORK, Nov 30 ― Treasury yields fell yesterday while the dollar gained and MSCI's global stock index barely rose as US Federal Reserve officials provided mixed messages on monetary policy while third-quarter data provided encouraging signs for the economy.
In US equities, the S&P 500 edged lower and Nasdaq dipped while the Dow rose slightly as investors waited for a key inflation reading due out early today.
Commerce Department data however, provided some optimism earlier yesterday, with US gross domestic product rising at a 5.2 per cent annualised rate in the third quarter, revised up from the previously reported 4.9 per cent and marking the fastest expansion since the fourth quarter of 2021.
The GDP report also confirmed inflation was trending lower, with slight downward revisions to measures watched by the Fed for monetary policy, suggesting a so-called Goldilocks scenario to Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions.
“The improving data is earning the possibility of some recalibration of policy next year. That's what the market is pricing in. If the data continues on this path it will earn modest rate cuts next year. That's helping to ignite risk appetites,” said Melson.
While the Federal Reserve officials yesterday sent mixed messages, investors still focused on comments made on Tuesday by Fed Governor Christopher Waller, an influential and previously hawkish voice at the US central bank. Waller had said rate cuts could begin in months if inflation keeps easing.
Yesterday the Fed's Bank of Atlanta President Raphael Bostic said he expects US growth to slow and inflation to continue to ease on the back of tight monetary policy.
In contrast, Richmond Federal Reserve Bank President Thomas Barkin said yesterday he is “sceptical” that inflation is on its way down to 2 per cent, and wants the option of another rate hike in case inflation gains steam.
The Dow Jones Industrial Average rose 13.44 points, or 0.04 per cent, to 35,430.42, the S&P 500 lost 4.31 points, or 0.09 per cent, at 4,550.58 and the Nasdaq Composite dropped 23.27 points, or 0.16 per cent, to 14,258.49.
MSCI's gauge of stocks across the globe gained 0.010 per cent.
US Treasury yields fell with the benchmark 10-year note on track for a third straight session of declines as the latest economic growth reading failed to upend market expectations that a Fed rate cut could be on the horizon.
Benchmark 10-year notes were down 7.3 basis points at 4.263 per cent, from 4.336 per cent late on Tuesday. The 30-year bond was last down 7.8 basis points to yield 4.4463 per cent, from 4.524 per cent. The 2-year note was last was down 9.9 basis points to yield 4.6372 per cent, from 4.736 per cent.
The dollar index, which measures the greenback against other major currencies, climbed from its lowest level in more than three months as investors consolidated positions after four days of losses, with support from the US economic data.
The dollar index rose 0.205 per cent, with the euro down 0.16 per cent to US$1.0972 (RM5.11). The Japanese yen strengthened 0.15 per cent versus the greenback at 147.24 per dollar, while Sterling was last trading at US$1.2696, up 0.02 per cent on the day.
“Given how sharply the dollar has sold off the last few weeks, it's only natural that we could be seeing a bit of profit taking,” said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi US in Boston.
Oil prices rose more than US$1 as investors looked past a jump in US crude, gasoline and distillate stock piles and focused on an upcoming meeting of Opec+, the Organisation of the Petroleum Exporting Countries and allies such as Russia.
Talks ahead of the meeting were focusing on additional cuts, although details have yet to be agreed, sources close to the group told Reuters.
US crude settled up 1.9 per cent at US$77.86 per barrel and Brent finished at US$83.10, up 1.74 per cent on the day.
Elsewhere, spot gold shot earlier in the day to a roughly seven-month high of US$2,051 an ounce and was last up 0.2 per cent to US$2,044.16 an ounce. US gold futures GCc1 gained 0.28 per cent to US$2,045.70 an ounce. ― Reuters
