U.S. rates being kept too low for too long could cause financial instability in future and stronger market expectations for a rate rise are “probably good”, St. Louis Federal Reserve President James Bullard said on Monday. Apple picked up 78 cents to $97.21 and Alphabet, Google’s parent company, added $9.67, or 1.3 percent, to $726.92. The yield on the benchmark 10-year Treasury note hovered at 1.842 pct and the yield on the short-term 2-year bonds also remained unchanged at 0.909 percent by 1040 GMT.
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WELLINGTON – The S&P/NZX50 Index dropped 2.09 points, or 0.03 per cent, to 6,907.7. Concern over the potential economic damage of an European Union exit, or Brexit, had pushed the pound to a seven-year low against the dollar in February.
Tightening borrowing costs would help choke inflation but also hamper economic expansion and reduce liquidity in stock markets, which could impede stock gains.
In December, the Fed increased its benchmark rate from roughly zero, but has refrained from increasing again on worries over slow growth of the United States in the first quarter and headwinds resulted from a weakening global economy. That would depend on the assessment as to the resilience of the US economy, which in effect impacts global growth.
Several members of the Federal Reserve will be making speeches this week, which may give insight to investors on which way interest rates might move at the Fed’s meeting in June.
“Clearly looking back a few days ago I think there’s a pretty strong sense among FOMC membership that the market was not putting a sufficient probability (on the) June or July meeting”, Dudley said, calling himself “quite pleased” that expectations had risen. The Nikkei 225 index closed down 0.5% (http://www.marketwatch.com/story/japan-shares-fall-after-export-data-china-rallies-2016-05-23) on yen strength.
Platinum for July delivery dipped $5.30 or 0.5 percent to $1,007.80 per ounce while palladium at $545.95 was down $4.30 or 0.8 percent. South Korea’s Kospi edged down 0.9 percent. The Standard & Poor’s 500 index picked up 21 points, or 1 percent, to 2,068.
ENERGY: Benchmark U.S. crude picked up 48 cents to $48.58 a barrel in NY. Energy stocks fell along with the price of crude oil. A much-stronger-than-expected April trade surplus (http://www.marketwatch.com/story/japanese-exports-fall-10-in-april-weighed-by-yen-2016-05-23) for Japan helped lift the yen (http://www.marketwatch.com/story/yen-gains-on-dollar-other-rivals-after-surprise-japan-trade-surplus-2016-05-23), which weighed on the dollar, sending it to Yen109.48 from Yen110.22 late Friday in NY. You have now viewed your allowance of free articles.
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