US stocks halt rally; dollar declines as bonds surge

Bloomberg

US stocks were mixed after a six-day rally as investors debated whether commitments by the Federal Reserve and the Biden administration to let the economy run hot will spark destabilising inflation.
The S&P 500 Index edged lower, taking a break from a rally fueled by signs the Biden administration intends to pass a sizable aid bill while the central bank promises to keep rates pinned near zero.
The Nasdaq 100 Index pushed higher, while small caps slipped. Treasuries advanced and the dollar fell for a third straight session. The difference between the US five- to 30-year yield curve and its German equivalent reached its widest since 2011, mainly reflecting expectations for a stronger inflation pickup in America.
In Europe, the Stoxx 600 Index drifted lower despite positive results from French oil giant Total SE and online grocer Ocado Group Plc.
Stretched valuations are giving investors pause as they cheer advancing vaccination efforts, rising stimulus prospects and a slowdown in coronavirus infections across the globe. With inflation expectations near the highest since 2013, questions have also begun to be raised about when the so-called reflation trade in bonds could start to threaten equities.
“We are getting to the point where we have to start worrying about the risk of how do we pull back on that stimulus, will it cause the economy to overheat, are these valuations becoming too expensive,” Saira Malik, Nuveen head of global equities, said on Bloomberg TV. “That is something we are going to be grappling with as the year goes on.”
Elsewhere, Brent oil hovered around $60 a barrel on signs the global market is tightening and demand is improving. Bitcoin pared an earlier jump to a record after Tesla bought $1.5 billion of the cryptocurrency.
The S&P 500 Index decreased 0.1% as of 9:58 am New York time and the Stoxx Europe 600 Index fell 0.2%.
while the MSCI Asia Pacific Index advanced 0.4%, the MSCI Emerging Market Index gained as much as 0.3%.
The Bloomberg Dollar Spot Index dipped 0.3%, and the euro advanced 0.4% to $1.2098.
While the British pound gained 0.3% to $1.3785, the onshore yuan strengthened 0.2% to 6.436 per dollar. The Japanese yen strengthened 0.6% to 104.61 per dollar.
The yield on 10-year Treasuries decreased two basis points to 1.15% and the yield on two-year Treasuries was unchanged at 0.11%.
while Germany’s 10-year yield gained less than one basis point to -0.44%, Britain’s 10-year yield was unchanged at 0.475%. Japan’s 10-year yield advanced less than one basis point to 0.073%.
West Texas Intermediate crude dipped 0.3% to $57.81 a barrel and Brent crude decreased 0.1% to $60.51 a barrel. Gold strengthened 0.6% to $1,841.75 an ounce.