The U.S. Treasury yield curve steepened to its steepest level in about two-and-a-half months as longer-dated debt fell, highlighting expectations that the Fed could hold off from raising rates at its two-day meeting set to conclude on Wednesday. That’s pushing the price of oil down and sending energy companies solidly lower.
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With expectations for a rate rise reduced slightly the dollar dipped against its peers, easing to 101.61 yen from 101.85 yen in NY, while the Australian dollar jumped 0.7 percent and the South Korean won added 0.2 percent. Anadarko stock sank 63 cents, or 1.1 per cent, to $57.16 and Freeport-McMoRan fell $1.08, or 9.7 per cent, to $10. On Friday, Boston Fed President Eric Rosengren delivered surprisingly hawkish remarks, sending USA stocks lower.
The dollar briefly hit a six-day low against the euro of $1.1283 after data showing weaker-than-expected US retail sales for August, which analysts said solidified expectations that the Fed would stand pat on rates at its meeting next week, however dollar recovered on the view that there was still a desire on the part of the USA central bank to hike before year-end. It fell more than 2% to touch a more than two-month low of $1,026.10 on Tuesday. Today’s United Kingdom inflation data is likely to provide some price action on the pound with August CPI expected to reach its highest level since December 2014 at 0.7%. Economists say December is the most likely time for the Fed to hike rates for the first time this year.
Japan’s Nikkei .N225 lost 0.6 percent and Australian stocks shed 0.1 percent.
According to Reuters, Wall Street surged on Monday after Brainard spoke, with the Dow Jones Industrial Average.DJI and the S&P 500.SPX making their strongest gains since early July. Asian stocks were mostly higher on Tuesday after a Federal Reserve board member said she was in no hur.
The Labor Department also is due to release United States consumer price index data for August on September 16. Brent crude, the benchmark for global oil trading, lost 40 cents to $47.92 a barrel in London.
The gap between five-year note yields and 30-year bonds yields widened to 129.70 basis points, the steepest since June 27.
In Tokyo on Tuesday, the dollar sank below ¥101.50, dragged down by Japanese shares and a fall in US long-term interest rates in off-hours trading, traders said.
Hong Kong rose 1.1 percent, chipping away at the 3.4 percent plunge suffered Monday, while Tokyo ended the morning slightly higher.
The pan-European index rose as much as 0.6 per cent in morning deals as investors took some comfort from Ms Brainard, who said that the Fed should avoid removing support for the U.S. economy too quickly.
Overnight, the MSCI Asia Pacific Index fell 0.1% with Japan’s Topix index ending the session little changed.
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OVERSEAS: Germany’s DAX lost 0.4 percent while France’s CAC-40 slipped 1.2 percent. US gold futures were up 0.2 percent at $1,326.90 an ounce.
