Actions and dollar rise as Fed officials downplay inflation concerns


Global equity markets rose and the US dollar rallied against major currencies on Wednesday for the first time this week, as Federal Reserve officials continued to downplay the outlook for rising inflation.

Richard Clarida, vice chairman of the Fed, said on Tuesday that the US central bank had the ability to curb a spike in inflation and organize a “soft landing” without derailing the country’s economic recovery. Read more

Clarida’s comments came a day after Fed Governor Lael Brainard and Federal Reserve Chairman James Bullard of St. Louis reiterated the Fed’s current accommodative monetary policy and hopes that any hike in price would decline over time. Read more

The dollar index was up 0.34% early in the afternoon, while benchmark 10-year US Treasury yields slipped to 1.557%, from 1.564% on Tuesday night.

“The Fed has really pushed its take on inflation, but when it comes to cutting bonds, investors are worried about allowing the economy to heat up,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.

The largest MSCI index of global equities rose 0.22% to 708.79. European stocks (.STOXX) held steady below a record high set on Tuesday.

Clarida’s comments reflect a change of tone at the Fed. A month ago, Fed Chairman Jerome Powell said it was “not yet” time to consider a discussion of reducing policy or slowing the pace of its asset purchases. . But more recently, policymakers have recognized they are closer to debating when to withdraw some of their crisis support from the US economy. Read more

On Wall Street, the three major indices are posting gains driven by consumer discretionary (.SPLRCD), communications services (.SPLRCL) and financials (.SPSY).

As of early afternoon, the Dow Jones Industrial Average (.DJI) was up 0.21%, to 34,383.38, the S&P 500 (.SPX) was up 0.29%, to 4,200.34 and the Nasdaq Composite (.IXIC) added 0.62%, to 13,741.98.

“The Fed is always pumping a lot of liquidity into the system and when the economy is going full blast, a lot of people think they might be making a policy mistake,” Ripley said.

Overnight in Asia, the largest MSCI index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 0.45% to more than two-week highs, while the Tokyo Nikkei (.N225) rose 0.3%.

Emerging market equities strengthened as figures of stronger economic growth in Mexico pushed the peso higher, raising hopes that the country is on the way to recovering from its sharpest economic contraction since the 1930s.

The MSCI Emerging Markets Equity Index (.MSCIEF) rose 0.49%.

Gold prices firmed above the key level of $ 1,900 an ounce on Wednesday, helped by lower yields on US Treasuries and the Fed’s actions to allay inflation concerns .

Spot gold was 0.2% higher at $ 1,902.26 an ounce in the early afternoon after hitting its highest level since Jan. 8 at $ 1,912.50.

Oil prices fell on Wednesday amid fears that a possible return of Iranian supply could lead to a glut exceeding expectations of improving fuel demand in the United States, which were bolstered by lower weekly estimates of fuel prices. stocks. Read more

Brent rose 11 cents, or 0.15%, to $ 6,855 a barrel, while U.S. West Texas Intermediate (WTI) crude was down 25 cents or 0.35% to $ 65.85 a barrel.

Our standards: Thomson Reuters Trust Principles.


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