Stock markets rise as US inflation data, ECB rate loom

NEW YORK -- Global markets rose on Monday at the start of a busy week that includes the release of key US inflation data and a European Central Bank decision on interest rates.

Wall Street pushed higher, with traders already focused on Wednesday's consumer price index (CPI) report, which could determine the Federal Reserve's next move on interest rates.

"Today's generally quiet session means that attention is focusing squarely on the US CPI data and ECB decision due this week," said Chris Beauchamp, chief market analyst at online trading platform IG.

"With the risk that both could deliver nasty surprises, risk appetite has been limited," he added.

Investors have worried that the Fed's rate-hike campaign to combat high inflation could tip the world's biggest economy into a severe recession.

But US Treasury Secretary Janet Yellen said Sunday she was optimistic that the economy was on course for a soft landing.

"I am feeling very good about that prediction," she said. "I think you'd have to say we're on a path that looks exactly like that."

She added: "Every measure of inflation is on the road down."

The Paris and Frankfurt stock exchanges closed higher even though the European Commission cut its 2023 growth outlook for the eurozone, from 1.1 percent to 0.8 percent.

The data will give the ECB more food for thought when it meets Thursday to decide whether to continue or pause its own rate hikes.

The commission said the higher borrowing costs had an impact on the eurozone economy.

"The new forecasts won't come as a major surprise and may even prove overly optimistic over time but they do come days ahead of the next ECB meeting and could tempt some policymakers into voting to pause the tightening cycle," said Craig Erlam, senior market analyst at the OANDA trading platform.

"Weaker economic readings will probably drive a lively debate and they obviously won't suggest, if they do hike, that it's job done," he added.

Elsewhere, London also rose while Tokyo and Hong Kong finished lower.

After a slow start, Asian traders turned more positive through the day and tracked last week's gains on Wall Street, with data showing a pick-up in Chinese inflation lifting sentiment.

Traders took heart from news that China's consumer price index rebounded in August, having contracted the month before.

While the 0.1 percent rise was less than expected, it gave traders some hope that the economy is slowly on the mend after a painful 2023 so far.

On currency markets, the yen picked up after sinking last week to a 10-month low against the dollar, with support coming from comments seen as hawkish by Bank of Japan boss Kazuo Ueda.

He told the Yomiuri newspaper that policymakers would have a better idea later in the year about wage rises, a key data point for rate decisions.

The yen has tumbled around 10 percent owing to the BoJ's refusal to move away from its ultra-loose monetary policy while the Fed pushed borrowing costs to a two-decade high.

The yuan also bounced back from a 16-year low against the dollar after the People's Bank of China said it would crack down on speculation that distorts the value of the currency after months of volatility.

In energy markets, gas prices rallied as strikes continued at Chevron plants in Australia.

Agence France-Presse

Asia takes heart from New Year gains in US stock futures

SYDNEY -- Asian shares crept cautiously higher on the first trading day of the new year as early gains in US stock futures spoke of some improvement in risk appetite.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.14 percent, as E-Mini future for the S&P 500 firmed 0.5 percent and Nasdaq futures 0.7 percent. Japan's Nikkei was closed for a holiday.

Wall Street has benefited from the merest hint of progress on the Sino-US trade standoff, though details were still notably lacking.

There was some hope of progress on the US government shutdown after President Donald Trump invited Republican and Democratic congressional leaders to a border security briefing.

However, it was not clear who would attend the meeting, which was set for later on Wednesday, or whether a deal would even be discussed.

Also looming are a closely-watched survey on US manufacturing due on Thursday, followed by the December payrolls report on Friday.

Federal Reserve Chairman Jerome Powell will have the chance to comment on the economic outlook when he participates in a joint discussion with former Fed chairs Janet Yellen and Ben Bernanke on Friday.

While the Fed is still projecting two or more rate rises this year, investors are more focused on slowing global growth and the disinflationary pulse from sliding oil prices.

Fed fund futures have all but priced out any hike for this year and now imply a quarter point cut by mid-2020.

The Treasury market also assumes the Fed is done and dusted. Yields on two-year paper have tumbled to 2.49 percent, just barely above the cash rate, from a peak of 2.977 percent in November.

Yields on 10-year notes have dived to their lowest since last February at 2.69 percent, making a bullish break of a major chart level at 2.717 percent.

The spread between two- and 10-year yields has in turn shrunk to the smallest since 2007, a flattening that has been a portent of recessions in the past.

"What is clear is that the global synchronized growth story that propelled risk assets higher has come to the end of its current run," the Treasury team at OCBC Bank wrote in a note.

"Inexorably flattening yield curves and, now, partially inverted U.S. yield curve have poured cold water on further policy normalization going ahead."

The breakneck drop in yields has been a headwind for the U.S. dollars. Against a basket of currencies it was stuck at 06.108 having fallen for two weeks straight.

The euro was firm at $1.1462 and poised for another attack on resistance in the $1.1485/1500 zone, a band that has held since late October.

Against the yen, the dollar was last trading at 109.56 and near its lowest since June last year.

The pullback in the dollar and the chance of no more US rate hikes has been a boon for gold. The precious metal fetched $1,281.41 an ounce to be close to a six-month peak.

Oil prices started with a tentative bounce after a punishing 2018. US West Texas Intermediate crude (WTI) futures slumped nearly 25 percent last year, while Brent lost 19.5 percent.

On Wednesday, US crude futures had nudged up 48 cents to $45.89 a barrel, while Brent was yet to trade.

source: news.abs-cbn.com

Fed raises interest rates, keeps 2018 policy outlook unchanged

WASHINGTON - The Federal Reserve raised interest rates on Wednesday but left its rate outlook for the coming years unchanged even as policymakers projected a short-term jump in US economic growth from the Trump administration's proposed tax cuts.

In an early verdict on the tax overhaul, Fed policymakers judged it would boost the economy next year but leave no lasting impact, with the long-run potential growth rate stalled at 1.8 percent. The White House has frequently said its tax plan would produce annual GDP growth of 3 percent to 4 percent.

The expected fiscal stimulus, coming on the heels of a flurry of relatively bullish data, cleared the way for the U.S. central bank to raise rates by a quarter of a percentage point to a range of 1.25 percent to 1.50 percent. It was the third rate hike this year.

But the Fed's forecast of three additional rate increases in 2018 and 2019 was unchanged from its projections in September, a sign the tax legislation moving through Congress would have a modest, and possibly fleeting, effect.

The rate increase represented a victory for a central bank that has struggled at times to deliver on its promised pace of monetary tightening. It also allowed Fed Chair Janet Yellen, at her final press conference before her term ends in February, to signal an all-clear for the US economy a decade after the onset of the 2007-2009 recession.

"At the moment the US economy is performing well. The growth that we're seeing, it's not based on, for example, an unsustainable buildup of debt ... The global economy is doing well, we're in a synchronized expansion," Yellen said. "There is less to lose sleep about now than has been true for quite some time, so I feel good about the economic outlook."

But the central bank's projections also contained some potential dilemmas for incoming Fed chief Jerome Powell.

The Fed now envisions a burst of growth, ultra-low unemployment of below 4 percent in 2018 and 2019 and continued low interest rates - yet little movement on inflation.

Yellen said the persistent shortfall of inflation from the Fed's 2 percent goal was the major piece of "undone work" she was leaving for Powell to figure out.

In its justification for Wednesday's rate increase, which was widely expected by financial markets, the Fed's policy-setting committee cited "solid" economic growth and job gains.

US stocks extended gains after the release of the policy statement before ending mixed, while Treasury yields dropped. The dollar fell against a basket of currencies.

Traders of US short-term interest rate futures kept bets the Fed would raise rates only twice next year.

The Fed now sees gross domestic product growing 2.5 percent in 2018, up from the 2.1 percent forecast in September. The pace of growth is expected to cool to 2.1 percent in 2019, slightly higher than the prior forecast of 2.0 percent.

"Changes in tax policy will likely provide some lift to economic activity in coming years," Yellen said, adding that "the magnitude and timing of the macroeconomic effects of any tax package remain uncertain."

The impact would "mainly" work to raise aggregate demand as households and companies have more money to spend, Yellen said, with "some potential" to raise investment and the economy's longer-term growth.

INFLATION CONCERNS

The Fed also said on Wednesday it expected the nation's unemployment rate would fall to 3.9 percent next year and remain at that level in 2019, well below what is considered to be full employment. It previously had forecast a jobless rate of 4.1 percent for those two years.

But inflation is projected to remain shy of the central bank's goal for another year, with weakness on that front still enough of a concern that policymakers saw no reason to accelerate the expected pace of rate increases.

"It shows at least some members of the Fed don't see any reason to keep hiking rates in an environment where the economy is growing more strongly but certainly not overheating and where inflation hasn't become a problem and doesn't look like it is going to be one," said Kate Warne, investment strategist at Edward Jones.

Policymakers do see the federal funds rate rising to 3.1 percent in 2020, slightly above the 2.8 percent "neutral" rate they expect to maintain in the long run. That indicates possible concerns about a rise in inflation pressures over time

Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari dissented in the policy statement on Wednesday.

source: news.abs-cbn.com

Fed chair nominee Powell defends push to review financial regulations

WASHINGTON - Jerome Powell, President Donald Trump's choice to lead the US Federal Reserve, defended plans to potentially lighten regulation of the financial sector during a controversy-free hearing on his nomination to take over the central bank.

Tapped to replace current chair Janet Yellen, Powell on Tuesday skirted several efforts by members of the Senate Banking Committee to draw him into the debates preoccupying Capitol Hill.

Powell refused to analyze the impact of proposed tax cuts or, as some of his colleagues at the Fed have done, argue for more immigration to boost the labor force. He said economic growth was likely bound in a range of between 2 and 2.5 percent annually, short of Trump's 3 percent goal, without a jump in productivity that many economists regard as unlikely.

In general the 64-year-old lawyer stuck close to script, reciting the current Fed consensus that interest rates are due to continue rising gradually, that the course of inflation remains a mystery, and that weak wages and low labor force participation indicate the jobs market still has room to improve.

Early in his time as a governor, Powell, a lawyer who has spent the bulk of his career in the private sector as an investment banker, shared some conservative concerns about the extent of the Fed's crisis response.

But he ultimately came to agree that the benefits of current Fed policy, with years of loose money allowing time for displaced workers to trickle back to the job market, outweighed the risks - and that future crisis would require the Fed, as he said in his opening statement, "to respond decisively."

The sharpest and most detailed exchanges involved financial regulation, an area Powell has focused on during his years as a Fed governor and where he said it was time to take a pause and evaluate where things stand eight years after the end of a deep 2007 to 2009 recession.

"I am not characterizing what we are doing as deregulation...It is looking back and making sure what we did makes sense," Powell told the committee. "It does not help anyone for banks to waste money."

Powell said he wanted to be sure regulations were "tailored" to the size and role of different institutions, perhaps allowing smaller banks more latitude to trade securities and make other investments, and decreasing the frequency and intensity of "stress tests" for all but the largest financial companies.

In a statement that may surprise some analysts and regulatory experts, he declared the problem of banks that were "too big to fail" all but solved. Asked if any firms were still so large that their collapse would cause wide-ranging harm to the financial system, he responded "I would say no to that."

Over the course of the roughly 2-hour hearing none of the senators voiced opposition to Powell, though the back and forth over regulation prompted Democrats to question whether he would coddle Wall Street, while Republicans wondered if the Fed would go far enough in lightening the burden on financial businesses.

No Senate committee or floor vote has been scheduled yet, but Powell is expected to win confirmation before Yellen's term expires in early February.

There was no obvious market reaction to Powell's appearance in Congress. Analysts, meanwhile, noted the near-rote response to some questions and wondered what that portends when Powell - who would be the first non-economist to hold the top Fed job since the 1970s - confronts conditions that require him to improvise.

Trump nominated Powell from a list of 5 finalists that included Yellen, seeing in him a way to extend Fed policies that have driven unemployment to 4.1 percent and the stock market to record highs, but without having to renominate a veteran of prior Democratic administrations.

Powell's hearing "contained few signs that he will bring any new thinking or a change of approach," wrote Michael Pearce, US economist for the Capital Economics consulting firm, referring to the nominee as "closely guarded" in his reiteration of existing Fed talking points. "We are increasingly worried that a policy mistake in either direction is possible in the years ahead."

Compared to some other confirmation hearings in the Trump era, however, Powell's was an almost congenial affair. During 5 years as a Fed governor, with deep ties to the region as a Maryland native and former Treasury Department official, he has built relationships with both Democrats and Republicans on the panel who said they respected his work.

Perhaps as a result, much of the questioning involved efforts to draw him out on issues like whether the tax plan being debated on Capitol Hill would - as Republicans argue - boost economic growth, or simply explode the debt as Democrats contend.

Powell dodged, resorting to a common Fed stance that tax and spending policy is up to elected leaders and outside the Fed's authority.

"I am not an expert on what analysis is out there," Powell said.

source: news.abs-cbn.com

US rate hike bets lift dollar, bond yields; stocks gain

NEW YORK - The dollar on Wednesday climbed to a one-month high against a basket of currencies, while financial stocks and Treasury yields rose after strong economic data helped boost expectations for a US Federal Reserve interest rate hike in December.

US small-cap stocks rallied on the expectation of lower taxes, tallying their biggest single-day gain since March.

President Donald Trump proposed the biggest U.S. tax overhaul in 3 decades, offering to cut taxes for most Americans but prompting criticism that the plan favors the rich and companies and could add trillions of dollars to the deficit.


“For the first time since we have had Trump and the administration in office, it looks like there is incrementally more of a possibility of tax reform going through that would actually be meaningful," said Thomas Martin, senior portfolio manager at GlobAlt Investments in Atlanta, Georgia.

Bets on another interest rate hike before the year ends firmed following Tuesday comments from Federal Reserve Chair Janet Yellen, who said the US central bank needed to continue gradual rate hikes despite broad uncertainty about the path of inflation.

Data showed new orders for key US-made capital goods increased more than expected in August, pointing to strength in the economy despite an anticipated drag to growth from massive hurricanes.

Perceived chances of a hike at the Fed's December meeting hovered around 80 percent on Wednesday from 72 percent on Monday, according to the CME Group's FedWatch tool.

The hawkish rate sentiment helped fuel S&P 500 financial shares, which gained 1.3 percent. The S&P 500 tech sector rose 1.1 percent, helped by an 8.5 percent surge in shares of Micron Technology after the chipmaker's better-than-expected quarterly earnings report.

On Wall Street, the Dow Jones Industrial Average rose 56.39 points, or 0.25 percent, to 22,340.71, the S&P 500 gained 10.2 points, or 0.41 percent, to 2,507.04 and the Nasdaq Composite added 73.10 points, or 1.15 percent, to 6,453.26.

“The renewed interest in technology coupled with the likelihood of higher interest rates spurring an interest in financials, then the news on tax reform progressing, are all positive catalysts" for U.S. equities, said Alan Lancz, president of investment advisory firm Alan B. Lancz & Associates Inc in Toledo, Ohio.

The Russell 2000 small-cap index rose 1.9 percent and hit a record high.

The pan-European FTSEurofirst 300 index rose 0.40 percent and MSCI's gauge of stocks across the globe gained 0.17 percent.

European banks rose 2 percent and hit their highest in 7 weeks.

DOLLAR RALLIES

The dollar index rose 0.5 percent, with the euro down 0.37 percent to $1.17470.

"It really is an extension of the rally kicked off by the Fed last week," said Mazen Issa, senior FX strategist at TD Securities in New York, referring to the Fed's meeting where it signaled it may raise rates for a third time this year.

Benchmark 10-year notes last fell 21/32 in price to yield 2.3032 percent, from 2.229 percent late on Tuesday.

Yields on the 2-year note rose to as high as 1.483 percent, the highest since November 2008.

Brent crude futures slipped from 26-month highs, while US crude rallied, after crude stockpiles in the world's top oil consumer unexpectedly drew down with refiners coming back online following Hurricane Harvey last month.

US crude rose 0.33 percent to $52.05 per barrel while Brent was last at $57.70, down 1.27 percent on the day.

Spot gold dropped 0.8 percent to $1,283.07 an ounce.

source: news.abs-cbn.com

Wall Street lower with pressure from Apple, rate expectations

US stock indexes were trading lower on Thursday, weighed down by Apple and rising expectations for a third interest rate hike this year.

The S&P and the Dow were on track to snap a string of record sessions and Apple was the biggest drag on the 3 major indexes with a 1.3-percent drop on concerns about demand for its latest smartphone.

Investors increased bets the US Federal Reserve would raise rates again this year and were also assessing the impact of the central bank's decision to start reducing its roughly $4.2 trillion US Treasury bonds and mortgage-backed securities.


With investors reacting to the signal for another rate hike and the start of the Fed's balance sheet normalization, the market does not appear to reflect the risks associated with US-North Korea tensions and high valuations, said Peter Cecchini, chief market strategist at Cantor Fitzgerald in New York.

"The market is down 10 basis points but it is very complacent and very comfortable in its own skin right now and not really concerned about risk," said Cecchini, citing low market volatility.

The CBOE Volatility Index was slightly higher on Thursday at 9.79, but had hit its lowest level since August 8 earlier in the day.

Investors are now pricing in about a 70-percent chance of a December hike, according to CME's FedWatch tool, up from about 51 percent just prior to the Fed meeting.

At 2:58 p.m. ET, the Dow Jones Industrial Average fell 36.4 points, or 0.16 percent, to 22,376.19, the S&P 500 lost 4.73 points, or 0.19 percent, to 2,503.51 and the Nasdaq Composite dropped 21.34 points, or 0.33 percent, to 6,434.71.

Fed Chair Janet Yellen said the fall in inflation this year remained a mystery, adding that the central bank was ready to change the interest rate outlook if needed.

"Today's movement is most likely a give-back as people digest the Fed statement and press conference," said Michael Dowdall, investment strategist at BMO Global Asset Management.

"Clearly, the Fed doesn't have answers on the 2017 low inflation weakness, but they're still very sensitive to falling behind the curve so they want to stay in front of the inflation curve."

Only two of the 11 major S&P sectors, financials and industrials, were higher, with gains around 0.4 percent. The consumer staples index was the biggest decliner with a 0.95 percent drop.

Financial stocks have been on a tear in recent days as investors anticipated Fed commentary on rate hikes, which tend to help bank profits.

The S&P has risen about 11.8 percent so far this year, helped by strong corporate profits and lingering optimism among some investors that US President Donald Trump will cut taxes for businesses.

This has boosted valuations. The S&P is trading near 17.6 times expected earnings, compared to its 10-year average of 14.3, according to Thomson Reuters Datastream.

"It's very hard for me to see a tremendous catalyst for the upside although I also don't see that massive catalyst to create a crack to the downside," said Cantor's Cecchini.

Declining issues outnumbered advancing ones on the NYSE by a 1.23-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favored decliners.

source: news.abs-cbn.com

World shares rise to fresh peak; oil gains

NEW YORK - Upbeat data helped send world shares to a fourth all-time high in less than a month on Thursday as Wall Street edged higher in anticipation of solid earnings, while crude oil gained on evidence of stronger demand in China.

Stocks were buoyed in Asia and elsewhere a day after Federal Reserve Chair Janet Yellen signaled a rise in interest rates would be less aggressive than some investors had expected.

Sentiment was also boosted after China reported upbeat data on exports and imports for June, the latest sign that global growth is picking up a bit.

That offset reports of higher production by key members of the Organization of the Petroleum Exporting Countries in a report by the International Energy Agency (IEA), lifting oil prices.

The Chinese trade data pushed Asian shares up more than 1 percent and lifted MSCI's 47-country gauge of global equity markets to a fresh record high with a gain of 0.34 percent.

"Yesterday's move was in response to Yellen comments that should inflation remain below the 2 percent target rate, the central bank will be less aggressive in their tightening program," said Sam Stovall, chief investment strategist at CFRA Research.

"Today, the market is saying that's old news and let's focus on the matter at hand, which is earnings that will be coming out in earnest this week," Stovall said.

US shares rose in anticipation second-quarter earnings will grow 7.8 percent for S&P 500 companies, according to Thomson Reuters data.

Major banks, including JPMorgan Chase, Citigroup and Wells Fargo, will report results on Friday. JPMorgan rose 0.64 percent, Wells Fargo gained 0.78 percent and Citigroup added 0.15 percent, helping the financial sector to boost the benchmark S&P 500 the most.

The Dow Jones Industrial Average closed up 20.95 points, or 0.1 percent, to 21,553.09. The S&P 500 gained 4.58 points, or 0.19 percent, to 2,447.83 and the Nasdaq Composite rose 13.27 points, or 0.21 percent, to 6,274.44.

In Europe, the pan-regional FTSEurofirst 300 index of leading shares rose 0.29 percent to close at 1,518.91.

OIL GAINS

Encouraging US economic data initially supported the dollar. The number of Americans filing for unemployment benefits fell last week for the first time in a month and producer prices unexpectedly rose in June. The data likely will keep the Fed on track for a third interest rate increase this year.

The dollar index fell 0.02 percent, while the euro slid 0.06 percent to $1.1403. The Japanese yen weakened 0.09 percent versus the greenback at 113.24 per dollar.

Yellen told a Senate panel on Thursday in a hearing focused on regulatory reform and a discussion of lagging productivity that it would be "quite challenging" for US growth to reach a 3-percent target set by President Donald Trump.

Oil prices rose after dropping in recent weeks to levels not seen since the end of last year as investors lost faith in a deal between the Organization of the Petroleum Exporting Countries and non-OPEC producers to reduce output.

US shale oil production also has risen sharply.

Brent crude rose 68 cents to settle at $48.42 a barrel. US light crude settled up 59 cents at $46.08.

US Treasury yields rose after falling for 3 straight days, tracking gains in German bond yields with solid US economic data supporting their trend higher.

Benchmark 10-year U.S. Treasury notes fell 4/32 in price to yield 2.3426 percent.

The German 10-year Bund rose 2 basis points to yield 0.533 percent.

source: news.abs-cbn.com

Dow at record, European stocks up as Yellen pledges gradual rate hikes

NEW YORK - European and US stocks scored solid gains Wednesday, with the Dow ending at a fresh record, as investors welcomed congressional testimony by Federal Reserve Chair Janet Yellen reiterating the pledge to gradual interest rate increases.

Sentiment also got a boost from higher oil prices following US inventory data showing a big drop in petroleum supplies.

Yellen, appearing in a twice-annual hearing on Capitol Hill, reaffirmed the US central bank's plan for gradual rate hikes, as long as the economic data remains solid.

But Yellen noted that inflation lags the Fed's 2 percent target.

The overall impression "eased some of the rate-hike concerns that surfaced last week following the release of the FOMC minutes from the June meeting, which initially left the impression that the Fed plans to press on with a tightening of policy despite the persistence of below-target inflation data," said Briefing.com.

The Dow rose 0.6 percent to finish at its first record since June 19.

European equities also closed strong, with Paris, London and Frankfurt all winning at least one percent.

But the dollar retreated against the pound and yen after Yellen adopted a more dovish line than some expected.

"At the end of the day, the Fed is still telling us rates will rise again but September is off the table," said Kathy Lien, managing director of BK Asset Management.

Oil prices pushed higher after US inventory data showed a 7.6 million barrel decline in petroleum inventories.

That lifted shares of BP rose 1.9 percent, Italian oil giant Eni added 1.7 percent and Dow-member Chevron was up 0.8 percent.

Technology shares were also were strong, with Facebook jumping 2.3 percent, Google-parent Alphabet 1.5 percent and Microsoft 1.7 percent.

Amazon gained 1.3 percent as it hailed a successful Amazon Prime shopping day on Wednesday, saying it attracted more new members to the subscription service than on any previous day.

Airline shares were lifted after American Airlines said second-quarter revenue per seat mile had risen 5 to 6 percent from the year-ago period, a better range than previously.

American Airlines rose 4.2 percent, Delta Air Lines gained 2.2 percent and United Continental 4.7 percent.

KEY FIGURES AROUND 2045 GMT (4:45 a.m. Thursday in Manila)

New York - DOW: UP 0.6 percent at 21,532.14 (close)

New York - S&P 500: UP 0.7 percent at 2,443.25 (close)

New York - Nasdaq: UP 1.1 percent at 6,261.17 (close)

London - FTSE 100: UP 1.2 percent at 7,416.93 (close)

Frankfurt - DAX 30: UP 1.5 percent at 12,626.58 (close)

Paris - CAC 40: UP 1.6 percent at 5,222.13 (close)

Tokyo - Nikkei 225: DOWN 0.5 percent at 20,098.38 (close)

Hong Kong - Hang Seng: UP 0.6 percent at 26,043.64 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,197.54 (close)

Euro/dollar: DOWN at $1.1415 from 1.1463

Pound/dollar: UP at $1.2885 from $1.2844

Dollar/yen: DOWN at 113.17 yen from 113.89

Oil - Brent North Sea: UP 22 cents at $47.74 per barrel

Oil - West Texas Intermediate: UP 45 cents at $45.49 per barrel

source: news.abs-cbn.com

Nikkei nears two-year high as US hi-tech rebound boosts mood

TOKYO - Japan's Nikkei rose more than 1 percent to hit a near two-year high on Tuesday following a rebound in US hi-tech shares as investors bet on solid growth in the economy and corporate profits globally.

MSCI's broadest index of Asia-Pacific shares outside Japan was little changed in early trade.

A big focus for Asia is whether index provider MSCI will later in the day open up its Emerging Markets Index to Chinese mainland shares which have restricted access for foreign investors.

Many investors expect the so-called A shares that make up the majority of China's stock market are likely to be included after being rejected on three previous occasions.

The Philippine Stock Exchange Index opened little changed at 7,943.72.

Wall Street's S&P 500 and the Dow industrial average hit record highs as technology shares bounced back after some sudden falls earlier this month.

"Hi-tech shares just went through a correction. Their valuation is not that expensive, standing far below their levels at the peak of dot-com bubble in 2000. Given that their profits are expected to see exponential growth in coming years, it is premature to say the rally in hi-tech shares is over," said Mutsumi Kagawa, chief global strategist at Rakuten Securities.

US financial shares also gained as US debt yields rose after New York Fed President William Dudley, a close ally of Fed Chair Janet Yellen, said US inflation should rebound alongside wages as the labour market continues to improve.

The 10-year US Treasuries yield edged up to 2.191 percent from seven-month low of 2.103 percent touched on Wednesday following surprisingly weak US inflation data.

"Even though the Federal Reserve is about to shrink its balance sheet, possibly as soon as in September, US bond yields are kept at low levels, which are very comfortable for stocks," said Norihiro Fujito, senior investment analyst at Mitsubishi UFJ Morgan Stanley Securities.

"Trade volume is light and whether the market continues to rise depends on whether large cap tech shares continue to rebound," he also said.

The rebound in US bond yields helped to lift the US dollar. The euro traded at $1.1148, just above its two-week low of $1.11315 set on Thursday.

The British pound slipped slightly to $1.2732 from Monday's high of $1.2814, held back by uncertainty over domestic politics and over Britain's economic future, as formal Brexit negotiations got under way on Monday.

Oil prices flirted with this year's lows as market players saw more signs that rising crude production in the United States, Libya and Nigeria undercut OPEC-led efforts to support the market with output curbs.

Brent crude futures traded at $47.01 per barrel, up 0.2 percent on the day but not far from last week's low of $46.70 and five-month low of $46.64 touched in early May.

US crude futures stood at $44.28 per barrel, about a half cent above its five-month low of $43.76 set on May 5.

Safe-haven gold hit one-month low of $1,243.3 an ounce As risk sentiment improved.

source: news.abs-cbn.com

Asian stocks at 19-month highs on robust Wall Street

HONG KONG - Asian stocks edged up to fresh 19-month highs on Thursday, helped by an extended rally on Wall Street and strong US data though the dollar stepped back after a recent bounce.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percent, rising to its highest since July 2015. It is up by a tenth so far this year partly underpinned by more optimistic earnings expectations and a gradual unwinding of bearish emerging market bets.

Australian stocks advanced 0.4 percent in early deals with looming jobs data the key event risk on the day. A strong showing would set the market up for further gains with technical indicators helping.

"The index has now closed above the key technical resistance level at 5,800 which is a bullish sign opening up further gains in the coming months back towards 6,000," said James Woods, global investment analyst at Rivkin Securities in Sydney.

The Australian employment data is due at 00:30 GMT with market expectations centering around 10,000 jobs being created.

Wall Street pushed further into record-high territory on Wednesday, with the S&P 500 notching a seven-session winning streak, helped by robust economic data and optimism that President Donald Trump will cut corporate taxes.

That optimism was not shared in the currency markets with the dollar's recent bounce running out of steam as investors took profits even as fresh data showed a pick up in inflationary pressures.

US consumer prices recorded their biggest increase in nearly four years in January, backing expectations for the Federal Reserve to raise interest rates at a steady pace over the course of the year.

Fed Chair Janet Yellen, in her second day of economic testimony before Congress, offered no additional insight on the timing of the central bank's next rate hike after her comments a day earlier had hinted at a fairly hawkish policy stance.

Traders may also be leaning towards a rate increase delayed beyond the Fed's March meeting, with the futures markets only pricing a 27 percent chance of a tightening next month.

The dollar index, which measures the currency against a trade-weighted basket of six major peers, slipped to 101.02. It rallied to a one-month high of 101.76 on Wednesday.

In commodity markets, oil prices softened as record high U.S. crude and gasoline inventories fed concerns about a global glut. U.S. crude was down 0.15 percent at $53.03 a barrel and Brent was flat at $55.75 a barrel.

source: news.abs-cbn.com

Asian stocks and dollar firmer as Yellen hints at March rate hike

TOKYO - Asian stocks rose early on Wednesday as Wall Street set record highs overnight after Federal Reserve Chair Janet Yellen spoke in support of an interest rate hike next month, while the dollar hovered near three-week highs.

Yellen said on Tuesday that the Fed will probably need to raise interest rates at an upcoming meeting in March, and that delaying rate increases could leave the Fed's policy-making committee behind the curve.

Yellen's comments boosted US bank stocks, helping push Wall Street indexes to record highs overnight.

The rise in US stocks nudged MSCI's broadest index of Asia-Pacific shares outside Japan to a 19-month high. The index was up 0.3 percent early on Wednesday.

"Fundamentally, the US banks are simply being used as a vehicle to express reflation and 'Trumponomics'," wrote Chris Weston, chief market strategist at IG in Melbourne.

"Although last night really belonged to Janet Yellen whose prepared comments that waiting too long to tighten would be 'unwise' and a further review its policy stance will take place at its upcoming meetings."

Japan's Nikkei added 1 percent and Australian stocks rose 0.9 percent.

In currencies, the dollar index against a basket of major currencies stood at 101.230, near a three-week high of 101.380 scaled overnight as investors reassessed the possibility of the Fed hiking interest three times this year following Yellen's comments.

US interest rate futures implied traders saw about a 41 percent chance of at least three rate increases in 2017, up from a 33 percent chance on Monday, CME Group's FedWatch program showed.

The greenback was a shade higher at 114.370 yen after gaining about 0.5 percent the previous day, when it rose to a two-week high of 114.500. The euro was steady at $1.0576 after slipping to a one-month trough of $1.0561 overnight.

The dollar was supported as US Treasury yields rose on the Fed Chair's comments, with the benchmark 10-year note yield climbing about four basis points to an 11-day high the previous day.

The stronger dollar, which puts non-US buyers of dollar-denominated commodities at a disadvantage, weighed on crude oil prices.

US crude was down 0.3 percent at $53.07 a barrel. Crude already came under pressure the previous day on evidence of surging US stockpiles.

Spot gold was little changed at $1,228.00 an ounce after paring its gains the previous day on a firmer dollar.

source: news.abs-cbn.com

Dollar, bond yields up on strong US data; Wall Street dips

NEW YORK - The dollar and US Treasury yields gained on Thursday after a batch of solid economic data, while Wall Street indexes slipped as investors held back a day ahead of the inauguration of President-elect Donald Trump.

Oil futures rallied from one-week lows after the International Energy Agency said crude markets were tightening. The S&P 500's energy index, however, traded lower.

Benchmark 10-year US Treasury notes fell 23/32 in price to yield 2.47 percent, up from 2.39 percent late on Wednesday. The yields reached as high as 2.496 percent, the highest since Jan. 3, and have jumped from a low of 2.31 percent on Tuesday. Data showed US home-building rebounded in December and the number of Americans filing for unemployment benefits unexpectedly fell last week to a near 43-year low.

Investors were also reacting to comments by Federal Reserve Chief Janet Yellen a day ago signaling a path of steady interest rate increases, taken as a sign of economic strength.

But the data was not enough to embolden US equity investors, who were wary as they waited to see if Trump acts on pro-business promises such as tax cuts, fiscal stimulus and lighter regulation that had sent the S&P 500 up 5.8 percent since Nov. 8, one of the strongest transitions in history.

"There's been a lot of positive news priced into the market so it's taking a break on the equities side," said Wade Balliet, Chief Investment Strategist, Bank of the West, based in Denver who said investors are "getting nervous trying to piece together what the policies will be."

Investors shouldn't expect clarity from the inauguration speech but would hope for signals in coming weeks, Balliet said.

The S&P 500 sank 5.3 percent on outgoing President Barack Obama's inauguration day and fell 20.4 percent in the first 34 trading days of his administration, bottoming on March 9, 2009. But it has nearly tripled from that low, and including reinvested dividends has delivered a total return of nearly 295 percent.

The Dow Jones Industrial Average closed down 72.32 points, or 0.37 percent, to 19,732.4, the S&P 500 lost 8.2 points, or 0.36 percent, to 2,263.69 and the Nasdaq Composite fell 15.57 points, or 0.28 percent, to 5,540.08.

The dollar was up 0.2 percent against a basket of major currencies after paring gains. It had risen as much as 8 percent, boosted by the economic data and Yellen's comments. Yellen was due to speak again on Thursday evening.

Trading in European equities and the euro was choppy after ECB President Mario Draghi said interest rates would stay at current or lower levels for an extended period and the ECB would increase or extend bond purchases if the outlook worsens.

The euro clawed back losses against the dollar in choppy trade and was last up 0.25 percent after falling as much as 0.4 percent after Draghi's comments.

US crude settled up 0.6 percent to $51.37 per barrel, after shedding 2.67 percent on Wednesday. Brent crude finished up 0.5 percent at $54.16 after settling down 2.79 percent the day before.

Gold was up 0.1 percent after falling as much as 0.7 percent earlier in the day. It is on track for a 4.6 percent gain for the month as many investors have sought a safe haven.

source: news.abs-cbn.com

Wall Street set to open higher as earnings season picks up

US stocks looked set to open slightly higher on Wednesday as investors assessed bank earnings and economic data, while awaiting Federal Reserve Chair Janet Yellen's speech.

Shares of Goldman Sachs were up 0.5 percent at $237 in premarket trading after the bank reported a nearly four-fold rise in quarterly profit. Citigroup edged up after posting a 7 percent rise in profit.

Investors are also awaiting President-elect Donald Trump's inaugural speech on Friday to gain insight into his plans for the US economy.

"There is a lot of uncertainty hovering over the market, regarding what policies will be implemented," said Quincy Krosby, market strategist at Prudential Financial.

"But the market appears to be giving the President-elect the benefit of doubt."

The Trump rally, which drove Wall Street to record highs, has been showing signs of fatigue since the start of the year as investors get increasingly nervous about his unconventional approach to trade and politics.

US stocks closed lower on Tuesday, with some of the biggest beneficiaries of the post-election rally including banks and transport companies shedding some of their gains.

Dow e-minis were up 33 points, or 0.17 percent at 8:35 a.m. ET (9:35 p.m. Philippine time), with 23,992 contracts changing hands.

S&P 500 e-minis were up 4 points, or 0.18 percent, with 117,642 contracts traded.

Nasdaq 100 e-minis were up 9.25 points, or 0.18 percent, on volume of 18,430 contracts.

A report from the US Labor Department showed the Consumer Price Index edged up 0.3 percent in December, leading to the largest year-on-year increase in 2-1/2 years, a sign that inflation pressures could be building.

Investors are also eyeing Janet Yellen's speech at 3:00 p.m. ET (4 a.m. Thursday, Philippine time) to see if she will echo a growing opinion among policymakers that fiscal stimulus under the Trump administration may call for more aggressive interest rate hikes.

A reading on December industrial output and a report on the housing market are also scheduled for the day.

Target dropped 3.4 percent to $68.55 after the big-box retailer reported a decline in sales during the holiday season and cut its fourth-quarter earnings forecast. Shares of bigger rival Wal-Mart were off 1.2 percent.

CoLucid Pharmaceuticals surged 32.7 percent to $46.30 after Eli Lilly said it would buy the drugmaker for about $960 million. Lilly's stock was up 0.3 percent.

Gigamon dropped 22.6 percent to $34.10 after the network traffic management software maker estimated its fourth-quarter revenue to fall below its previous forecast.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva)

source: news.abs-cbn.com

Stocks, dollar edge higher but safe havens get bid after Turkey, Germany attacks

NEW YORK - Stocks edged higher worldwide on Monday as Wall Street extended a rally that has pushed US stocks near all-time highs, while the dollar got a boost from Federal Reserve Chair Janet Yellen who sounded optimistic about the US labor market.

Deadly attacks late in the trading day in Turkey and Germany made stocks pare their gains, while Treasuries prices rose and the safe-haven yen firmed.

US stock indexes hit record highs last week as investors piled on bets that the anticipated fiscal boost from the incoming administration of US President-elect Donald Trump would support riskier assets.

That trend continued Monday with MSCI's gauge of global equities finishing the session modestly higher, buoyed by gains in US stocks, which were led by telecom and tech shares in a low-volume session.

"The Trump rally is still with us," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. "Every time something's down for two days, people jump on it. People are looking for buying opportunities."

Stocks pared their gains after news that a truck had plowed into a crowd in Berlin, killing nine people and injuring at least 50 others.

The Dow Jones industrial average rose 39.65 points, or 0.2 percent, to 19,883.06, the S&P 500 gained 4.46 points, or just under 0.2 percent, to 2,262.53 and the Nasdaq Composite added 20.28 points, or 0.37 percent, to 5,457.44.

The Turkish lira and Russian rouble fell to session lows against the greenback on news the Russian ambassador to Turkey was killed in a gun attack at an art gallery in the Turkish capital of Ankara.

The lira was last down about 0.6 percent at 3.525 per dollar while the rouble hit a session low of 62.045 per dollar before retracing to 61.854, according to Reuters data.

The safe-haven Japanese yen added to gains after the reports of the ambassador being shot and the truck attack, rising 0.75 percent against the dollar.

The dollar edged into positive territory after the release of Yellen's remarks to students at the University of Baltimore, eyeing a 14-year high against a basket of currencies touched last week. It was last up 0.2 percent.

US Treasury prices also rose after news of the incidents, with benchmark 10-year notes gaining 16/32 in price to yield 2.538 percent.

Europe's index of 300 leading shares retreated from Friday's 11-month high and fell 0.07 percent. Germany's DAX index rose 0.2 percent while France's CAC slipped 0.22 percent. Britain's FTSE 100 edged up 0.08 percent.

Japan's Nikkei stock index, which has benefited from the yen's sharp fall against the dollar, snapped its nine-day winning streak, edging down from Friday's one-year high.

MSCI's all-country world index that tracks stock markets around the globe rose 0.14 percent.

Oil prices edged lower but held just below $55 per barrel, with little news to influence the market.

Brent futures fell 0.8 percent to $54.77 a barrel, while U.S. West Texas Intermediate crude fell 0.2 percent to $51.79.

source: news.abs-cbn.com

Fed set to hike rates, policy outlook now hinges on Trump presidency

WASHINGTON - The Federal Reserve will conclude its two-day policy meeting on Wednesday afternoon with an interest rate increase all but assured and will issue new forecasts assessing whether the economic outlook has changed since the U.S. election.

The latest policy statement and projections are to be released at 2 p.m. EST (1900 GMT) with a press conference by Fed Chair Janet Yellen following at 2:30 p.m.

Markets are poised for the federal funds rate to rise to a target range of between 0.5 and 0.75 percent from the current range of 0.25-0.5 percent, where they have rested since the Fed approved its last rate increase a year ago.

Of more significance is the backdrop of the meeting. After years of the Fed fretting about low interest rates and weak inflation, the weeks since Donald Trump's victory have seen both bond yields and inflation expectations start to rise. The Dow Jones industrial average is up more than 11 percent since the vote.

Details of policymakers' new economic assessments, the first since the election, will be dissected closely to see if policymakers yet feel the arrival of the Trump administration has shifted the economic outlook or poses a risk of greater inflation. The president-elect has said he wants a major tax cut and infrastructure spending program, even as the economy approaches full employment and wages are rising.

"Inflation risks are more significant than they were three months ago," when the policymakers issued their last forecasts, sad Northern Trust chief economist Carl Tannenbaum. "Rates could well rise more than anticipated."

Despite the changed circumstances, it is not certain the Fed will budge on its assessments. The median forecast of policymakers as of September was for two interest rate increases in 2017, an outlook Tannenbaum and many analysts feel may remain the case.

Trump has not yet taken office, and any proposals would have to clear a Republican-controlled Congress that may be stricter about increasing public debt than Trump. In recent public appearances some Fed officials have said they see a chance Trump's policies may force them to speed the pace of rate increases, yet also said they are hesitant to change their outlook before he shares more details.

"Investors who are looking for clarity may be disappointed," said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management.

source: news.abs-cbn.com

Fed turns to Trump agenda with rate hike nearly in the bag

WASHINGTON - The Federal Reserve inaugurates the Trump era this week with a near-certain interest rate increase and new economic forecasts providing a first glimpse into whether the U.S. election has reshaped the central bank's growth and inflation outlook.

Fed fund futures show a 97 percent probability that the Fed will lift rates by a quarter of a percentage point at the end of its two-day policy meeting on Wednesday, according to the CME Group.

All 120 economists in a Reuters poll expect a rate hike in the wake of a string of solid U.S. economic reports.

More telling will be whether the stock market rally and jump in bond yields triggered by Trump's Nov. 8 victory will push the Fed to an inflection point of its own and a higher projected pace of rate increases for 2017 and beyond.

The Republican businessman is inheriting a good economy, one that grew by 3.2 percent in the third quarter, the fastest pace in two years. There are, however, concerns that his plan to reduce taxes, cut regulation and increase infrastructure spending could not just boost the economy but also fuel higher inflation.

Since first published in 2012, the Fed's quarterly "dot plot" of projected interest rates has generally moved in one direction – down – and any post-election change will show whether policymakers expect Trump's policies to shake things up.

As of September, Fed officials' median projection was for two rate increases next year and a long run "neutral" level of 2.6 percent. A rate increase this week would be the first since last December and only the second since the 2007-2009 financial crisis.

"Their path is going to move up faster and a little sooner," said Steve Rick, chief economist for CUNA Mutual Group. He said the economy was running at its potential, and that was the Fed's cue to "exit stage right" and steadily move rates to normal.

Fed officials have long hoped that other government policies would take the place of monetary engineering, which some believe may have lost its effectiveness in lifting economic growth.

They have warned in recent weeks that any new government spending should specifically be designed to boost productivity in an economy that is already near full employment and facing a high public debt burden.

The Fed's new forecasts will indicate if policymakers feel that the monetary-to-fiscal handover is on the horizon, or need more time for the Trump administration's plans to become more detailed and move through Congress.

Fed Chair Janet Yellen is scheduled to hold a press conference at 2:30 p.m. (1930 GMT) on Wednesday to elaborate on the economic outlook and policy statement.

She'll have a broad set of issues to cover since her last press conference in September - from the Federal Open Market Committee meeting itself, to the likelihood she will be replaced in early 2018 and the risks she foresees from the Trump agenda.

Trump repeatedly attacked Yellen during the election campaign, accusing her of holding down rates to help his Democratic rival. Since the election, he has expressed his disapproval of corporate America, criticizing Boeing, and took credit for a deal to keep hundreds of jobs at an Indiana plant from being moved to Mexico.

The president-elect also will be under scrutiny after this week's Fed meeting for clues about how he plans to handle his relationship with the central bank.

"There is a real risk that he could be openly critical of the decision to raise rates next week," Paul Ashworth, an economist with Capital Economics, said in a note last week.

That could upset markets and raise serious issues about whether Trump intends to leave the Fed alone or try to influence its decisions. Top U.S. elected officials, in particular the president, typically avoid criticizing the Fed's short-term rate decisions, emphasizing instead the need for monetary policy to be set independently.

"If he remains silent after the announcement to raise interest rates next Wednesday, then we can begin to assume that it will be business as usual for the Fed," Ashworth wrote.

WATCHING THE MARKETS

Trump's plan to cut taxes and regulation and funnel fresh billions into capital projects must pass Congress, and it may be well after that before any new programs meaningfully effect economic forecasts.

But policymakers also watch the markets closely. It may be hard for the Fed to stick with its ultra-slow pace of rate hikes if a major tax overhaul and fiscal spending plan are unleashed.

TD Securities analysts said that fiscal policy at this point in the economic recovery could prompt "an inflationary demand shock" that adds nearly a percentage point to economic growth, but spurs the Fed to raise rates much quicker than expected - by nearly an extra percentage point per year.

That scenario of a central bank caught behind the curve and forced to act faster is one that Yellen and other policymakers have said they hope to avoid out of fear it could prompt a recession.

Fed officials in recent days have acknowledged the Trump agenda may cause them to switch gears, though it is not clear how soon.

"At this juncture, it is premature to reach firm conclusions," New York Fed President William Dudley said last week.

But, since Trump won the election, Dudley added, "the stock market has firmed, bond yields have risen and the dollar has appreciated ... Market participants now anticipate that fiscal policy will turn more expansionary and that the (FOMC) will likely respond by tightening monetary policy a bit more quickly than previously anticipated."

source: news.abs-cbn.com

Dollar soars on US yield gains, Asian shares wobbly

TOKYO - The dollar vaulted to 13 1/2-year highs against a basket of major currencies as US bond yields rose, leaving Asian stocks vulnerable to potential rotation out of emerging markets to the United States.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3 percent in early trade to hover just above its four-month low touched earlier in the week. It looks set to log its fourth straight week of losses.

The dollar's rise, however, was a boon for Japan's exporter-driven Nikkei average, which rose 0.9 percent to a 10-month high.

On Wall Street, the benchmark S&P 500 index rose 0.5 percent to within a hair of its record high as bank stocks were boosted by bets on higher interest rates and consumer discretionary stocks were helped by favorable economic data and earnings.

US consumer prices posted their biggest increase in six months, while housing starts surged to a 9-year high and jobless claims fell to the lowest level since November 1973.

All these data fit nicely into the current market's theme that US inflation is likely to accelerate under Trump administration's policies such as tax cuts, increased fiscal spending and more trade protection for domestic industries.

The 10-year US Treasuries yield rose to 2.326 percent, its highest since January. The two-year US Treasuries yield rose to a 10 1/2-month high of 1.058 percent.

"I think the rises in US yields have been driven by excessive optimism in the stock market on Trump's economic policies," said Shuji Shirota, head of macro economic strategy at HSBC in Tokyo.

Rising yields reflect market players' reassessment of the Fed's policy path down the road, although Federal Reserve Chair Janet Yellen told the Joint Economic Committee of Congress on Thursday that Trump's election has done nothing to change the Federal Reserve's plans for a rate increase "relatively soon."

Yet market perceptions have clearly changed, with money market futures pricing in about a 90 percent chance of a Fed rate hike in December.

They are also pricing in one or more rate hikes next year, a sea change from before the election when they priced in a less than 50 percent chance of a 2017 rate hike, assuming the dovish Yellen would be extremely cautious in raising rates.

The dollar rose to 110.34 yen, its highest level since early June. The euro slumped to $1.0620, a low last seen almost a year ago.

The dollar's index against a basket of six major currencies rose above its "double top" touched in March and December of 2015. The index now stands at its highest level since 2003.

"Double top" is a technical analysis term describing a currency (or other liquid asset) rising to a high, falling, and then rising again to the same level. Breaking the double top is often seen as a bullish sign by technical analysts.

Gold slumped to 5 1/2-month low of $1,211.6 per ounce and oil prices, which have been supported by hopes the Organization of the Petroleum Exporting Countries would reach an agreement to cap production at its meeting in Vienna on Nov. 30, were hit by the dollar's strength. US crude futures slipped to $45.05 per barrel from Thursday's two-week high of $46.58.

source: www.abs-cbnnews.com

Federal Reserve closer to rate hike, but inflation doubts remain

WASHINGTON - Several voting Federal Reserve policymakers judged a rate hike would be warranted "relatively soon" if the US economy continued to strengthen but doubts on inflation remained, according to the minutes of the Fed's September policy meeting released on Wednesday.

The minutes of the Sept. 20-21 meeting, at which the US central bank held rates steady, also showed the depth of division over timing.

"Several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded about as ... expected," the Fed said in the minutes.

Seventeen policymakers participated at the September meeting, of whom 10 had a vote. In the minutes, both voting members and the wider group were divided on how much more they can allow the labor market to strengthen before raising rates.

Some believe that with the United States already near full employment, inflation could rise too quickly if the Fed waits too long.

The minutes said "it was noted that a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labor market and inflation."

US stocks rose slightly following the release of the minutes, while yields on US government debt pared earlier gains.

"They just want a bit more data to be sure. We think they will have those data by the time of the December meeting," said Ian Shepherdson, an economist at Pantheon Macroeconomics.

Three voting members of the rate-setting committee dissented in the September policy statement in favor of an immediate hike, the first time since 2011 that so many have taken such action in the same direction at a single meeting.

In that policy statement, the Fed incorporated new phrasing saying it would maintain current interest rate levels for "the time being," widely seen as a hawkish signal.

According to the minutes, however, a few voters were concerned the inclusion of the phrase "might be misread as indicating that the passage of time rather than the accumulation of evidence" would drive future decision-making.

Although Fed policymakers disagree on whether the current 1.7 percent inflation rate is sufficiently close to their 2 percent objective, many voting members remarked that "there were few signs of emerging inflationary pressures."

Since the meeting, Chair Janet Yellen and several other Fed policymakers have said they expect a rate hike by year-end should the labor market and inflation continue to strengthen.

Almost all agree that after another rate hike, the path of interest rates will be much shallower than the Fed's last tightening cycle. At the September meeting, the Fed scaled back the number of rate hikes it expects next year, to two from three.

New York Fed President William Dudley said earlier on Wednesday the Fed could afford to be "gentle" in raising rates as the US economy has "plenty of room to run."

Last Friday's monthly jobs report for September showed that while employment gains are slowing, they are still well above the level required to offset population growth.

There are two more meetings scheduled this year, on Nov. 1-2 and Dec. 13-14. Traders have all but ruled out a move at the November meeting, which takes place just a week before the US presidential election. They currently see about a 70 percent probability the Fed will raise rates in December, little changed from before the minutes, according to data from CME Group.

Yellen is scheduled to deliver a speech on Friday in Boston, which may offer insight into the Fed's latest thinking.

source: www.abs-cbnnews.com

Most Asia stocks slide on Fed officials' rate comments, dollar firms

SINGAPORE - Most Asian share markets tumbled on Monday while the U.S. dollar added to gains made after Federal Reserve Chair Janet Yellen indicated a U.S. interest rate increase remains on the cards for this year.

European markets also looked set for a weak start, with financial spread betters expecting Germany's DAX to open down 0.7 percent, and the blue-chip Euro Stoxx 50 to begin the day 0.6 percent lower. British markets are closed for a holiday.

MSCI's broadest index of Asia-Pacific shares outside Japan extended losses to 1 percent.

Japan's Nikkei bucked the trend, closing 2.3 percent higher, the biggest one-day gain in three weeks, as the yen weakened against the resurgent dollar.

China's CSI 300 index and the Shanghai Composite slipped 0.2 percent. Hong Kong's Hang Seng shed 0.4 percent.

The case for a U.S. rate hike has strengthened in recent months, with a lot of new jobs being created, and economic growth looks likely to continue at a moderate pace, Yellen said in a speech at the Fed's annual monetary policy conference in Jackson Hole, Wyoming, on Friday.

While Yellen did not give guidance on what the central bank needs to see before raising rates, she said the Fed already thinks it is close to meeting its goals of maximum employment and stable prices. She described consumer spending as "solid" but noted that U.S. business investment was weak and exports hurt by a strong dollar.

Comments by the Fed's No. 2 policymaker, Vice Chair Stanley Fischer, following Yellen's speech also bolstered the case for a hike this year.

Asked on CNBC whether a rate hike in September and more than one policy tightening before year-end should be expected, Fischer said Yellen's comments were "consistent with answering yes" to both questions, albeit still data-dependent.

Among the first data to be scrutinized will be U.S. consumer confidence for August, due on Tuesday; productivity, manufacturing and construction figures on Thursday; and August non-farm payrolls data rounding out the week on Friday.

Global factory activity surveys will also be released on Thursday.

Traders have modestly raised expectations for U.S. rate increases this year, but remain cautious.

The odds of a hike in September rose to 33 percent following the comments, from 21 percent on Thursday, according to CME Group's FedWatch tool. Traders were pricing in a 59.1 percent chance of a hike in December, up from 51.8 percent on Thursday.

"While the move toward another Fed rate hike will likely cause bouts of consternation in investment markets I don’t see the same degree of uncertainty that we saw around last year’s Fed rate hike," Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note.

"It's clear from the Fed's actions this year that it is aware of global risks, the impact of its own actions on those risks and any potential blow back to the U.S. economy and of the impact of a rising U.S. dollar in doing some of its work for it."

The comments from Yellen and Fischer dragged Wall Street lower at the close.

But they proved a boon for the U.S. currency, with the dollar index, which tracks the greenback against six global peers, jumping 0.8 percent on Friday. It held steady at 95.552 on Monday.

The dollar rose 0.5 percent to a two-week high of 102.34 yen on Monday. That followed gains of 1.3 percent on Friday, its biggest one-day advance in almost seven weeks.

Japanese household spending and retail sales data for July are due on Tuesday. Investors are seeking some sign that Prime Minister Shinzo Abe's massive stimulus programs are having an effect, after figures on Friday showed a decline in consumer prices by the most in three years in July.

The euro was flat at $1.120 after tumbling 0.8 percent on Friday, its biggest one-day slide since July 15.

In commodities, crude prices retreated on the rally in the dollar and concerns about growing output after exports from Iraq in August exceeded July levels.

Iran also said late last week that it would only cooperate in upcoming producer talks in September if other exporters recognized Tehran's right to regain market share lost during international sanctions that were only lifted in January.

U.S. crude futures dropped 1.5 percent to $46.95.

Global benchmark Brent crude retreated 1.2 percent to $49.31.

The stronger dollar also weighed on gold. Spot gold slipped 0.2 percent to $1,318.10, after earlier touching a five-week low.

source: www.abs-cbnnews.com

Dollar rises following Yellen remarks on rate hikes

NEW YORK -- The dollar rose Friday against the euro, the yen and the British pound following remarks from the US central bank favoring a near-term increase in interest rates.

In a much-anticipated address, US Federal Reserve Chair Janet Yellen said the case had "strengthened" in recent months for a rate increase but did not clearly say when this could occur.

Toward 2100 GMT, the euro was at $1.1195, down from $1.1281 on Thursday while the dollar rose to 101.77 yen, up from 100.55.

The pound fell to $1.3135 from $1.3187.

Christopher Vecchio, a currency analyst at DailyFX, said Yellen's speech had given the dollar trade a needed shot in the arm on currency markets.

"The US Dollar Index, mired in an apathetic lull the past several days, is in the midst of posting its widest daily trading range of the week on the back of Chair Yellen’s commentary," said Vecchio.

US central bankers are due to meet again three times between now and the end of the year.

2100 GMT Friday Thursday

EUR/USD 1.1195 1.1281
EUR/JPY 113.94 113.43
EUR/CHF 1.0950 1.0919
EUR/GBP 0.8523 0.8555
USD/JPY 101.77 100.55
USD/CHF 0.9781 0.9680
GBP/USD 1.3135 1.3187


source: www.abs-cbnnews.com