Treasuries rise on Fed speculation; stocks fall

U.S. Treasuries rose and equities declined as investors speculated about a change in leadership at the Federal Reserve.

U.S. Treasuries rose and equities declined as investors speculated about a change in leadership at the Federal Reserve. 

Treasuries yields fell after Fed Governor Lael Brainard, seen as more dovish by some, was interviewed for the central bank’s top job, and they continued to plunge after prices paid to U.S. producers in October accelerated in line with estimates.

The S&P 500 shed 0.4 per cent, halting an eight-day rally to a record, led by losses in energy and consumer discretionary stocks. Tesla Inc. sank as much as 11 per cent, weighing on the index. PayPal Holdings Inc. fell 12 per cent after its guidance disappointed, and General Electric Co. surged 4.8 per cent after saying it will split into three companies. Meanwhile, European equities declined and Asian stocks were mixed. 

Global equities are hovering near all-time highs as investors weigh strong earnings, easing travel curbs and U.S. infrastructure spending against the risk of persistent inflation that may lead to tighter monetary policy. Consumer price data on Wednesday will offer traders the latest reading on price pressures.

“Though there were no surprises with the PPI read, it could be viewed as somewhat of a disappointment in that inflation hasn’t eased up in the slightest,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial, referring to the producers price index. “There’s no denying that pricing pressure looms large.”