U.S. government bond prices have slowed and Wall Street shares failed to build on the all-time highs reached last week as traders turned cautiously ahead of a two-day meeting. of the U.S. central bank beginning Tuesday.
After a rally last week while investors invested in the Federal Reserve seeking high U.S. inflation to maintain its pandemic-era support for financial markets, the yield on the 10-year Treasury bond increased 0, 02 percentage points to 1,485 percent.
Wall Street’s S&P 500 index led 0.3 percent lower in New York’s first quarter after hitting another record high on Friday. The technology-focused Nasdaq Composite index rose 0.1 percent. The Stoxx Europe 600 also gained 0.1 percent, certainly to achieve a new maximum close.
The Fed is largely expected to maintain its $ 120 billion monthly bond purchase that has eased financial conditions for businesses and households since March last year.
These acquisitions of assets, which have been followed by tax regulators in Europe and the UK, have lowered yields on government bonds, reduced corporate lending costs and increased the appeal of riskier assets such as stocks.
However, after a rapid recovery in the U.S. economy fueled by coronavirus vaccines and President Joe Biden’s massive stimulus programs, some analysts see Fed policymakers advancing their forecasts of the first rise of post-pandemic interest rates.
“We hope the Fed will update its outlook for growth and materially revise the inflation forecast,” said in a research note Tiffany Wilding, U.S. economist at investment house in Pimco bonds. “We think most Fed officials will also push forward their projections for the first rate hike until 2023 [from 2024]. ”
“We expect more talk of a future discussion on the decline,” said Grace Peters, investment strategist at JPMorgan’s private bank. “With the right taper to start early next year.”
The FTSE All-World index of developed and emerging market shares has revolved around its all-time high over the past few weeks as investors take a wait-and-see approach to the long-term path of monetary policy.
Title of U.S. consumer price inflation 5 percent in the 12 months to May. Jay Powell, Fed chairman, argued that the rises are a temporary effect of the reopening of the U.S. economy following coronavirus arrests. “But others are worried that inflation is more structural,” said Marco Pirondini, head of U.S. equities at Amundi. “I say it’s 50-50 from everywhere.”
A rise in the prices of used cars and trucks, after a global shortage of semiconductors lowered production of new vehicles, accounted for about a third of the May CPI increase, according to the Bureau of Labor Statistics.
But U.S. wages could also “increase more steadily,” Pirondini said, after Biden signed an executive order in late April to increase government pay, pressuring private industry to increase wages as well.
The dollar index, which measures the U.S. currency against that of trading partners, fell 0.1 percent. The euro was up 0.2 percent against the dollar, including $ 1,212. The pound was up 0.1 percent at $ 1,411. The dollar index has gained 0.7 percent this year, with currency traders expecting even a clearer picture of the future path of U.S. monetary policy.
Brent crude, the international benchmark for oil, gained 1 percent to $ 73.39 a barrel.