(Bloomberg) — Treasuries slipped while S&P 500 futures fluctuated on the last trading day of the quarter as Federal Reserve Governor Christopher Waller poured cold water on the path to lower interest rates.
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In a speech titled, “There’s Still No Rush,” Waller said the Fed still needs to see lower inflation before easing monetary policy. Two-year Treasury yields rose five basis points and the dollar strengthened. US stock futures were little changed after the S&P 500 closed at a record yesterday.
“Market easing expectations for the Fed still need to adjust,” Win Thin and Elias Haddad, strategists at Brown Brothers Harriman wrote in a note.
Still, stock markets are on cusp of closing out blockbuster gains for the quarter. MSCI’s global equity index has soared 8% in the past three months, supported by rallies in the US, Japan and the frenzy for artificial intelligence. Data on US economic growth and jobless claims are scheduled later today. The Fed’s preferred inflation gauge — the core personal consumption expenditures price index — is due on Friday, when markets will be closed.
“No one wants to make bold moves heading into a high-impact data release that drops on a public holiday,” said Kyle Rodda, senior market analyst at Capital.Com Inc. “A hot inflation print raises pretty meaningful downside risks for equities given the fears that price growth could be accelerating, if not re-anchoring higher.”
In Europe, the Stoxx 600 added 0.3%, marking a four-day winning streak. The rally in European stocks has broadened out this month beyond the biggest names on the benchmark such as ASML Holding NV and Novo Nordisk A/S, unlike the US where the gains remain concentrated in big tech stocks.
Meanwhile, the euro fell to a five-week low and traded below $1.08 as the dollar strengthened.
Waller pointed to a strong US economy and robust hiring as further reasons the Fed has room to wait to gain confidence that inflation is on a sustained path toward the 2% target. “In my view, it is appropriate to reduce the overall number of rate cuts or push them further into the future in response to the recent data,” he said in prepared remarks Wednesday before the Economic Club of New York.
Key events this week:
UK GDP revision, Thursday
US University of Michigan consumer sentiment, initial jobless claims, GDP, Thursday
Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
US personal income and spending, PCE deflator, Friday
Good Friday. Exchanges closed in US and many other countries in observance of holiday. US federal government is open.
San Francisco Fed President Mary Daly speaks, Friday
Fed Chair Jerome Powell speaks, Friday
Stocks
S&P 500 futures were little changed as of 6:43 a.m. New York time
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 rose 0.3%
The MSCI World index was little changed
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.3% to $1.0793
The British pound fell 0.2% to $1.2617
The Japanese yen was little changed at 151.38 per dollar
Cryptocurrencies
Bitcoin rose 2.4% to $70,521.13
Ether rose 2% to $3,580.75
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.22%
Germany’s 10-year yield advanced two basis points to 2.32%
Britain’s 10-year yield advanced two basis points to 3.95%
Commodities
West Texas Intermediate crude rose 0.5% to $82.10 a barrel
Spot gold rose 0.8% to $2,211.43 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael Msika, Julien Ponthus, Tassia Sipahutar and Jan-Patrick Barnert.
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