Following a renewed bout of bond uncertainty, stocks and the US futures fell on Thursday as traders awaited remarks from Federal Reserve Chairman Jerome Powell. Treasury rates have levelled off.
As gold remained near a nine-month low, the Stoxx 600 Index fell 0.7 percent, pulled lower by miners. The S&P 500 and Nasdaq 100 contracts declined on Wednesday, but they were still off their session lows, as the 10-year Treasury yield approached 1.5 percent and inflation expectations grew.
Powell is expected to say later today at a Wall Street Journal webinar that the central bank will be extremely patient in withdrawing its support for the economy once the pandemic comes to an end. The dollar rose a slight bit.
The rise in inflation expectations and long-term borrowing costs is fueling uncertainty and increasing concerns that the stock markets’ long-term rally may be jeopardised. Investors are attempting to determine if central banks are willing to purchase more longer-dated bonds in order to keep financial conditions loose. The focus now shifts to Powell’s upcoming remarks, after Chicago Fed President Charles Evans said that the recent rise in interest rates was “unprecedented.”
Senate Democratic leaders are trying to rally support for the $1.9 trillion stimulus bill, which is expected to boost economic growth. According to the Federal Reserve’s Beige Book, the US economy expanded modestly in the first two months of the year, and vaccinations are helping to boost business optimism.
