A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

Stocks Edge Higher After Fed Minutes; Bonds Fall: Markets Wrap

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U.S. stocks edged higher, while Treasuries fell after Federal Reserve meeting minutes did little to alter views on the central bank’s policy path.

The S&P 500 eked out its seventh gain in eight sessions as the record of the gathering reinforced the Fed remains committed to its patient approach to further hikes without ruling them out if economic growth picks up. Caterpillar rallied after giving a bullish forecast for demand in China, lifting shares in materials producers. The 10-year Treasury yield climbed to 2.64 percent, while the dollar erased losses.

Taken together, minutes of the Fed meeting broke decidedly dovish, with a discussion of ending the balance sheet runoff and uncertainty about more rate hikes. That they didn’t do more to move prices reflects the big swings that have ruled equity and bond markets for the last three months. Much of the sentiment reflected in today’s statement was priced in by the S&P 500’s nearly 20 percent jump since Christmas.

“The Powell Pivot actually started on January 4th when Chair Powell spoke at the AEA,” said Michael O’Rourke, JonesTrading’s chief market strategist. “It is fair to say the dovish stance has been priced in.”

Stocks Edge Higher After Fed Minutes; Bonds Fall: Markets Wrap

The post-Christmas rally that’s added 18 percent to U.S. stocks appears to have run out of catalysts to propel it higher. Technical indicators, from closely watched moving averages to the relative-strength index, signal that gains from here may be difficult to come by. Investor focus will be trained on headlines out of this week’s negotiations in Washington and on any information coming out of the Fed that could shed more light on future monetary policy.

Elsewhere, the pound was little changed as Prime Minister Theresa May headed back to Brussels in a last-ditch attempt to save her Brexit deal. Gold traded near the highest since May and palladium soared to a record as a shortage started to bite. Emerging-market shares rallied and their currencies advanced. South Africa’s rand fell as the government unveiled a bailout package for utility Eskom.

Here are some key events coming up:

  • European Central Bank releases meeting minutes on Thursday.
  • Bank of Canada Governor Stephen Poloz speaks on Thursday; ECB President Mario Draghi speaks on Friday, the same day Reserve Bank of Australia Governor Philip Lowe gives parliamentary testimony.
  • An Indonesian rate decision is due Thursday.

These are the main moves in markets:

Stocks

  • The S&P 500 Index rose 0.2 percent at 4 p.m. New York time.
  • The Stoxx Europe 600 Index gained 0.7 percent to the highest in 19 weeks.
  • The MSCI All-Country World Index increased 0.5 percent to the highest in 19 weeks.
  • The MSCI Emerging Market Index surged 1.2 percent, the most since January.

Currencies

  • The Bloomberg Dollar Spot Index was little changed.
  • The euro was rose less than 0.1 percent $1.1343.
  • The Japanese yen fell 0.2 percent to 110.81 per dollar, the weakest in a week.
  • The MSCI Emerging Markets Currency Index gained 0.4 percent to the highest in two weeks.

Bonds

  • The yield on 10-year Treasuries climbed one basis point to 2.65 percent.
  • Germany’s 10-year yield declined one basis point to 0.100 percent.
  • Britain’s 10-year yield rose one basis point at 1.181 percent.

Commodities

  • The Bloomberg Commodity Index rose 0.5 percent.
  • West Texas Intermediate crude gained 1.5 percent to $56.92 a barrel.
  • Gold fell 0.1 percent to $1,344.00 an ounce.

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