Stocks near record highs as bonds slip before Fed

Bloomberg

US equities were little changed on Wednesday while Treasuries slipped as investors prepared for the latest Federal Reserve meeting to conclude, with anticipation growing that policy makers will signal a readiness to lower rates.
The three main US stock gauges drifted alongside the dollar, while the Stoxx Europe 600 was also little changed. Earlier, shares in Asia rallied, tracking the gains that almost sent the S&P 500 to a record high after President Donald Trump tweeted that he will sit down with Chinese President Xi Jinping at the G-20 summit next week.
“It’s Fed day, leaving all eyes on how they react to market pricing that has penciled in three cuts over the next year,” Mark McCormick, global head of currency strategy at TD Securities, wrote in an email. “We don’t think the Fed will cut and it seems more likely that this meeting is an appetiser to the G-20 entree.”
The yield on 10-year Treasuries pared some of the drop from a day earlier, leading a pullback of most European government bonds. The yield on Japan’s benchmark notes hit a three-year low. The pound gained for a second day.
As many of the world’s biggest central banks signal a shift to easier policy, traders are weighing that against trade war fears and signs of cooling global growth. Trump said that he had a “very good” phone conversation with Xi. The two leaders will hold an “extended meeting” at the G-20 summit on June 28-29 in Osaka.
“The Federal Reserve trumps Trump’s tariffs,” Brent Schutte, chief investment strategist, Northwestern Mutual Wealth Management, said in an interview at Bloomberg’s New York headquarters. “We’ve entered this bad news is good news time period and good news is still good news — you’re in this perverse time period.”
Elsewhere, West Texas crude swung between gains and losses as OPEC and its allies agreed to hold the next meeting to discuss oil-output cuts in July. The Turkish lira fell on a report the Trump administration is weighing new sanctions on the country over its purchases of the Russian S-400 missile-defense system.
The Fed, Bank of Japan and Bank of England all set monetary policy, along with central banks in Norway, Brazil, Taiwan and Indonesia.
The Fed’s two-day meeting was expected to end on Wednesday with a decision and press conference. Officials were expected to debate a rate cut to shelter the US economy, in part, from the fallout caused by escalating trade disputes.
UK retail sales are set for release on Thursday.
The S&P 500 Index less than 0.1 percent in New York, while the Nasdaq Composite Index was little changed and the Dow Jones Industrial Average increased 0.1 percent. The Stoxx Europe 600 was little changed. The MSCI Emerging Market Index climbed 1.3 percent, the biggest increase in more than a week. The MSCI Asia Pacific Index surged 1.8 percent, the highest in six weeks on the largest jump in more than five months.
The Bloomberg Dollar Spot Index declined less than 0.1 percent. The euro rose 0.2 percent to $1.1212, while the yen was little changed at 108.41 per dollar. The British pound rose 0.5 percent to $1.2621, the biggest rise in more than a week. The MSCI Emerging Markets Currency Index rose 0.3 percent.
The yield on 10-year Treasuries rose 3 basis points to 2.09 percent, the biggest increase in more than a week. Germany’s 10-year yield climbed 3 basis points to -0.30 percent.
West Texas Intermediate fell 0.7 percent to $53.50 a barrel. Gold decreased 0.1 percent to $1,344 an ounce. The Bloomberg Commodity Index dropped 0.4 percent.