Wednesday, 23 January, 2019

Stocks Close Firmly Negative Following Fed Minutes

She's also released a new song called Sober as she gears up for a world tour that begins in Manchester in September Source 1 NEWS
Nellie Chapman | 22 February, 2018, 09:58

The dollar climbed against a basket of major currencies on Wednesday, as markets anticipate the minutes of the Federal Reserve's previous policy meeting.

The January meeting was the last attended by Chair Janet Yellen, who was succeeded by Jerome Powell.

Market participants were looking ahead to the minutes of the Fed's latest policy meeting, due on Wednesday, for potential indications on the pace of future rate hikes.

Markets widely expect the Fed to raise rates for the first time this year at its March meeting. Harker told reporters that he believes two rate increases in 2018 would be appropriate.

The central bank has estimated 3 to 4 interest rate hikes this year.

Stocks gained ground after the minutes were released, then reversed course.

Other major indexes also fell, but the sell-offs weren't as steep.

Kaplan also had some cautionary words about the Trump administration's recent tax overhaul, which he said would help lift USA economic growth to 2.5 percent to 2.75 percent this year, pushing the US unemployment rate, now at 4.1 percent, down to 3.6 percent by the end of 2018. The Nasdaq was about flat at 7,234.31.

The DXY index traded modestly higher this morning to 89.85. While the headline 0.4 per cent month-on-month rise in January matched analyst expectations, core PPI rose by 0.4 per cent month-on-month, double the 0.2 per cent that had been expected by analysts polled by Bloomberg.

Disappointing manufacturing data in the eurozone dragged the common currency lower to $1.232.

The greenback was 0.1 percent higher to 1.2662 against its Canadian counterpart, while it increased 0.1 percent to 0.9378 against the Swiss franc.

Shares were off across Europe but the FTSE 100 added 0.25% in afternoon trading. The Hang Seng index rallied 1.8%, continuing to outperform the region after recovering from the widespread correction a few weeks ago.

-The euro sank 0.6 percent to $1.2337, the lowest in more than a week.

"I suspect, however, that when the next economic downturn eventually comes, tax receipts fall and the deficit widens that Treasury spreads will widen further", said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.

The Treasury auctioned off $179 billion in government debt on Tuesday - a larger-than-normal auction as the government ramps up borrowing after the Trump tax cuts. Bond yields have been rising as investors grapple with the possibility that the stronger economy, a growing federal deficit and accelerating inflation will force faster interest rate hikes.

This particular set of circumstances could also weigh on the United States dollar, adding to fears of higher imported inflation, making investors even twitchier.