US Stocks Decline With Treasuries, Dollar Gains: Markets Wrap

Andrew Cummings
February 22, 2018

Wall Street, which started the day positive, closed lower after bond yields surged.

The Federal Reserve's minutes from its most recent policy meeting indicated bullish sentiment among policymakers about the outlook for USA and global economic growth, reinforcing expectations for further interest rate rises this year.

Market participants probably interpreted the Fed minutes as leaving open the possibility that the central bank could raise interest rates four times this year, said Hirofumi Suzuki, an economist for Sumitomo Mitsui Banking Corporation (SMBC) in Singapore.

After inflation worries knocked the S&P 500 down more than 10 percent from its January 26 high, stocks had rebounded in recent sessions as yields on the 10-year US Treasury note had stabilized around the 2.9 percent mark.

Asian stock futures indicate a lower open after USA equities snapped a six-day rally on a disappointing result from Walmart Inc. and as Treasuries fell amid massive debt issuance.

Shares of Target and Costco Wholesale also fell, dragging the S&P consumer staples index down 2.3 percent.

In Britain, an unexpected jump in the jobless rate weighed on the pound, sending sterling down 0.22 percent to $1.3964.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent after slipping earlier in the session following the USA market losses, which snapped a six-session winning streak. The Kospi was down more than 1% as its day's close loomed with the Hang Seng modestly lower.

The dollar rose 0.3 per cent to trade at 107.60 yen, helping the greenback after recent falls against the Japanese currency.

Sticking closely to a view he laid out earlier this year, Harker said he expects the US economy to grow 2.5 percent this year before slowing to 2-percent growth next year and to below 2 percent in 2020.

But the greenback finally appeared to be benefiting from rising USA bond yields, especially as the Treasury Department issues more debt in anticipation of a higher deficit from last year's tax overhaul and plans to increase federal spending. Cleveland Fed President Loretta Mester is among speakers at the U.S. Monetary Policy Forum in New York City.

The New Zealand dollar gained 0.07 percent to 0.7342.

The euro sank 0.6 percent to $1.2337, the lowest in more than a week. While the German DAX Index edged down by 0.4%, the French CAC 40 Index rose by 0.2% and the UK's FTSE Index climbed by 0.5%.

The S&P 500 is up 27.72 points, or 1 percent.

The Russell 2000 is down 3.67 points, or 0.2 percent.

-The 2-year yield rose three basis points to 2.22 percent, the highest since 2008. The contract fell 11 cents to settle at $61.68 per barrel on Thursday.

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