Dollar Falls, Treasuries Gain Amid Economic Data

EghtesadOnline: The dollar slipped and Treasuries edged higher amid data showing tepid business investment in the U.S. even as consumers stepped up spending in the fourth quarter. American stock futures were little changed before Donald Trump’s policy speech.

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28 February 2017

The greenback retreated versus most major peers after revised growth data indicated slower investment by businesses offset stronger household purchases. The odds for a March interest-rate hike slipped below 50 percent, with yields on Treasuries little changed Tuesday. Shares of raw-material producers fell as the outlook for industrial metals worsened, while construction companies rose a second day after Trump said Monday he’ll spend “big” on infrastructure, Bloomberg reported.

Even as global equities climbed to record levels, investors have remained wary as they await details of Trump’s economic policies and watch for signals on the timing for higher rates. The White House began sketching out plans Monday, as Trump followed promises of infrastructure spending with a caution that tax details won’t become clear until after the costs of repealing the Affordable Care Act are known.

“Tonight is going to be about laying out the agenda,” Paul Kavanagh, chief executive officer of Patronus Partners Ltd. in London, said in an interview on Bloomberg radio. “The bond markets and the stock markets are going to be listening. To push through on many of the initiatives that he’s looking for over the next few months, he’s got to be relatively downbeat about the things that he will want to change.”

Fed Bank of Dallas President Robert Kaplan said policy makers should raise interest rates “sooner rather than later” and not pay excessive attention to market expectations. The chance of a rate hike at the central bank’s March 14-15 meeting jumped to 50 percent, federal funds futures showed, from 34 percent just five days ago.

What’s coming up this week:

Trump is expected to outline his priorities for the nation in an address before a joint session of Congress on Tuesday night in the U.S.

Fed officials are making speeches this week, including Chair Janet Yellen who addresses an event in Chicago on Friday.

This week’s economic data include U.S. personal income and spending. India and Australia will report on fourth-quarter GDP. China’s PMI data are expected to show continued expansion.

Here are the main moves in markets:

Stocks

Futures on the S&P 500 Index declined 0.1 percent at 8:34 a.m. in New York. The index closed Monday at a record.

The Stoxx Europe 600 Index was little changed after four straight days of losses. The index is still up 2.6 percent for February.

Asia stocks erased gains after Japan’s Topix gave up almost all of a 1 percent rise, with the steepest paring coming in the final half hour of trading. The MSCI Asia Pacific Index trimmed its monthly gain to 2.2 percent.

Currencies

The Bloomberg Dollar Spot Index fell 0.2 percent.

The yen added 0.4 percent to 112.70 per dollar, after sliding 0.5 percent Monday to snap a three-day winning streak.

The British pound slipped 0.2 percent to $1.2420. The currency is down 1.3 percent for the month.

Bonds

Yields on 10-year Treasuries rose one basis point to 2.36 percent after climbing five basis points on Monday.

European government bonds traded in a tight range. The German 10-year yield rose one basis point to 0.21 percent. Peripheral bonds extended Monday’s gains as 10-year Italian yields fell three basis points to 2.1 percent.

Commodities

West Texas Intermediate Crude fell 0.3 percent to $53.90 a barrel. Brent Crude retreated 0.5 percent to $55.67.

Gold climbed less than 0.1 percent to $1,253.49 an ounce. The metal has gained 3.5 percent in February, its second monthly advance.