NEW YORK, Feb 17 — US Treasury yields rose and the dollar edged up against the yen yesterday after data showed US producer prices increased more than expected in January, adding to the view that any interest rate cuts by the Federal Reserve are not imminent.
US stocks ended lower, while the MSCI global stock index dipped slightly.
The producer price index for final demand rose 0.3 per cent last month after declining by a revised 0.1 per cent in December, the Labour Department’s Bureau of Labour Statistics said. Economists polled by Reuters had forecast the PPI rebounding 0.1 per cent following a previously reported 0.2 per cent drop.
Yesterday, market expectations the Fed will start cutting rates in June were dialed back, with CME’s FedWatch Tool now showing a 69.9 per cent chance for a cut of at least 25 basis points, down from the nearly 90 per cent in the prior session.
“A number like this, it definitely pushes off the Fed for another month or two,” said Tom di Galoma, co-head of global rates trading at BTIG in New York.
A US consumer prices reading earlier this week was also stronger than expected.
The yield on the benchmark US 10-year Treasury note climbed 5.3 basis points to 4.293 per cent, down from an earlier high of 4.33 per cent, and was on pace for its second straight weekly gain.
The greenback also gained after the data. Against the Japanese yen, the dollar was last up 0.23 per cent at 150.26. The dollar index was last up just 0.02 per cent to 104.29, while the euro was up 0.02 per cent at 1.0773.
Bank of Japan Governor Kazuo Ueda said yesterday that monetary policy would most likely remain accommodative, even after ending negative interest rates, echoing recent reassurances from BOJ officials that have weighed on the yen.
On Wall Street, the Dow Jones Industrial Average fell 145.13 points, or 0.37 per cent, to 38,627.99, the S&P 500 lost 24.16 points, or 0.48 per cent, to 5,005.57 and the Nasdaq Composite lost 130.52 points, or 0.82 per cent, to 15,775.65.
US markets will be closed on Monday for the Presidents’ Day holiday.
MSCI’s gauge of stocks across the globe fell 0.31 points, or 0.04 per cent, to 750.24, while Europe’s STOXX 600 index rose 0.62 per cent.
Earlier on Friday, Japan’s benchmark Nikkei rallied to a 34-year high and was on the cusp of eclipsing the all-time peak reached during the heyday of the nation’s bubble economy in the 1980s.
Figures on Thursday showed that Japan and Britain slipped into recession at the end of last year.
Gold eased early on Friday and was set for a second straight weekly fall, but spot gold XAU= was last up 0.4 per cent on the day at US$2,012.86 per ounce.
Oil prices rose amid geopolitical tensions in the Middle East. Brent crude futures gained 61 cents to settle at US$83.47 a barrel, while US West Texas Intermediate crude rose US$1.16 to settle at US$79.19. — Reuters
