Stocks, bonds waver before Fed moment of reckoning
BNN Bloomberg
Global equity markets swung between gains and losses and Treasury yield curves flattened as traders braced for the Federal Reserve’s widely expected move toward policy tightening.
Global equity markets swung between gains and losses and Treasury yield curves flattened as traders braced for the Federal Reserve’s widely expected move toward policy tightening.
Futures on the S&P 500 Index and the Dow Jones Industrial Average were little changed after the underlying gauges rose to records on Tuesday. The two-year Treasury yield was steady, while the 30-year rate shed three basis points. European stocks struggled for direction and the dollar fell less than 0.1 per cent.
A widely communicated yet game-changing moment awaited traders, as the Fed may start tapering stimulus in a first step toward an eventual increase in interest rates. Policy makers have come under pressure to reassess their assessment of inflation being transitory, with bond and currency markets pricing in faster-than-expected rate hikes.
“The big question will be whether they will signal anything about when the rate hikes will start,” Jeanette Garretty, chief economist at Robertson Stephens Wealth Management, said on Bloomberg Television. “I think they are going to try and avoid that.”
Bond markets are witnessing a surge in volatility as signs of persistent inflation make central-bank tightening ever more likelier. Yet, equity markets have jumped from one record to another as the post-pandemic recovery fuels corporate profits.
