U.S. Stocks Advance, Bonds Erase Decline on Fed Minutes

U.S. stocks rose, Treasuries erased losses and the dollar fell after minutes from the Federal Reserve’s last meeting indicated officials considered gradual rate hikes warranted amid debate on the economic impact from a rising dollar and Donald Trump’s policies.

The S&P 500 Index rose a second day as investors heard a more dovish tone from policy makers in the minutes than after the Fed raised rates Dec. 14. Treasuries were little changed at 2.44 percent, three basis points lower than the day before the hike. The Bloomberg Dollar Index fell 0.4 percent as its rally to a 14-year high faltered. Crude and copper led gains in commodities.

The minutes of the session, at which officials raised their benchmark lending rate by a quarter percentage point, showed that uncertainties over future fiscal policies weighed heavily in their discussion of the economy and the path of monetary policy. Despite growing attention to the risks of fiscal policy spurring faster growth than currently forecast, most on the committee reiterated that a “gradual” pace of rate hikes over the coming years would likely remain appropriate.

Equities have rallied with the dollar, while Treasuries have plunged since Trump’s election. Signs the risk-on trade may be running its course have started to emerge, with stocks and rates on the 10-year virtually unchanged since the Fed’s policy decision three weeks ago.

Stocks

· The S&P 500 rose 0.6 percent to 2,270.64 at 4 p.m. in New York. The Dow Jones Industrial Average resumed its pursuit of 20,000, rising 59.37 points Wednesday to 19,941.13.

· Carmakers jumped after the six top-selling producers by U.S. sales beat analysts’ projections for deliveries in December. General Motors Co. and Ford Motor Co. rallied at least 4.6 percent.

· The Stoxx Europe 600 Index fell 0.1 percent to halt a three-day advance that took the measure into a bull market.

· The MSCI Emerging Market Index gained for the seventh time in eight sessions and touched a three-week high.

Currencies

· The Bloomberg Dollar Index was 0.4 percent lower after touching its highest level since at least 2005. The measure has jumped 1.9 percent since Dec. 13.

· The euro rose 0.8 percent to $1.0486 in its first gain against the dollar this year after the region’s inflation accelerated in December at the fastest pace since 2013.

· The rand strengthened 1.5 percent, the most among 24 emerging market currencies tracked by Bloomberg. The real gained 1.3 percent.

· China’s yuan rose 0.8 percent in offshore trading on speculation of contingency plans by the government to support the yuan and curb capital outflows.

Commodities

· Crude oil futures climbed 1.8 percent to settle at $53.26 a barrel in New York after tumbling 2.6 percent Tuesday. U.S. crude inventories were projected to have declined while OPEC and other producers implement promised production cuts.

· Gold futures rose 0.2 percent to $1,164.30 in New York while copper jumped 2.7 percent.

· Natural gas futures slipped 2.3 percent to $3.251 per million British thermal units. The contract on Tuesday plunged by the most in almost three years after forecasts released earlier for a deep freeze across the U.S. suddenly turned milder.

Bonds

· U.S. Treasury notes due in 10 years were little changed after erasing losses on the Fed minutes. The yield stood at 2.44 percent, a few points lower than investors could get on Dec. 13.

· The three-month London interbank offered rate breached 1 percent for the first time since 2009. Wednesday’s increase was the largest since the Federal Reserve boosted rates three weeks ago.

The information provided here has been produced by a third party and does not reflect the opinion of Vipro Markets. Vipro Markets has reproduced the information without alteration or verification and does not represent that this material is accurate, current, or complete and therefore should not be relied upon as such. The Information is not to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any particular trading strategy. We advise any readers of this content to seek their own advice. Reproduction or redistribution of this information is not permitted.