Friday , June 18 2021

Treasuries, dollar gain amid inflation caution

Bloomberg

Treasuries rise with the US dollar as investors debated the impact of resurgent inflation on monetary policy, while US index futures stalled with stocks near record highs.
The 10-year yield falls back to 1.56% area with focus turning towards Thursday’s consumer-price data that may offer clues on how far the Federal Reserve can postpone a tapering of stimulus. Futures on S&P 500 and Nasdaq 100 gauges were little changed after rising during Asian hours. Oil extended losses amid concern the recent rally may have gone too far. Etsy Inc falls in premarket trading on plans to sell
convertible senior notes.
The recovery in the world’s largest economy and the Fed’s continued dovish stance are supporting a risk-on environment, even as gains are punctuated by worries over inflation, high valuations and disparities in global vaccine rollouts. Forecasts for deepening price pressures have underpinned volatility this week as traders await clues to when the US central bank will begin discussions on a tighter policy.
“We advocate looking through near term market volatility and remain pro-risk, predicated on our belief that the Fed faces a very high bar to change its easy monetary policy stance,” BlackRock Investment Institute strategists led by Elga Bartsch wrote in a note.
Global equities hover around record highs, and Treasury yields have eased for three successive weeks. That suggests the Fed’s assurances are calming fears of a so-called taper tantrum for now. Yet on Tuesday, traders were exercising caution before the inflation data, helping the dollar post its first gain in three days.
Oil extended a decline, losing some momentum after hitting $70 a barrel in New York for the first time in over two years. Digital tokens including Bitcoin retreated, with the Bloomberg Galaxy Crypto Index shedding as much as 10%.
Etsy dropped 1.6% in early New York trading after saying it will privately place $1 billion of convertible senior notes due 2028. Tesla climbed 1.2% after posting a 29 percent month-on-month growth in deliveries of China-made cars in May.
In Europe, the benchmark Stoxx 600 gauge rose, led by travel companies. A gauge of global equities halted a two-day rally.
The Stoxx Europe 600 rises 0.1% as of 9:53 am London time and futures on the S&P 500 were little changed.
While futures on the Nasdaq 100 rise 0.1%, futures on the Dow Jones Industrial Average falls 0.1%. The MSCI Asia Pacific Index drops 0.2%. and the MSCI Emerging Markets Index also falls as much as 0.2%.

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