Stocks advance as US Fed week kicks off; gold drops

Bloomberg

US stocks added to records, the dollar halted a two-day drop and Treasuries slipped as investors remained bullish on the American economy ahead of the Federal Reserve’s policy meeting. Gold fell as demand for havens faded.
The S&P 500 Index held above 2,500, the Stoxx Europe 600 jumped the most in almost a week and equities increased from Australia to Hong Kong. Bloomberg’s dollar index. Gold and the yen fell, while oil gave up earlier gains. The pound slid before Bank of England Governor Mark Carney gives a speech in Washington and amid more bickering over Brexit.
After last week’s gains for risk assets—which owed more to a lack of bad news than to any positive catalysts—focus now turns to the Fed meeting this week. While the central bank is widely expected to keep the benchmark rate unchanged, close attention will be paid to the chance of an increase later in the year and on whether officials will announce the start of a reduction in the bank’s $4.5 trillion balance sheet.
“QE certainly is over; QT is about to begin,” Anthony Crescenzi, Pimco portfolio manager, told Bloomberg TV. “That’s quantitative tightening. It’s illogical to think that quantitative easing would help markets but quantitative tightening won’t hurt. It seems markets are taking the Fed’s quantitative tightening in stride. It will be like Fed Chair Janet Yellen has said, like watching paint dry.”
In the background, geopolitical risks refuse to dissipate. The US seeks a peaceful resolution to the tension with North Korea, but is prepared to use military force if diplomatic efforts fail to end the nuclear standoff, Secretary of State Rex Tillerson told CBS.
The comments were made ahead of US President Donald Trump’s first address before the United Nations on Tuesday.
Home construction and sales of previously owned properties are the highlights of the week’s US economic calendar. UK Prime Minister Theresa May has reshuffled her team of top Brexit negotiators in preparation for talks entering a new phase.
The BOJ is predicted to stand pat on Thursday and probably won’t reveal when it’ll unwind stimulus, but could signal determination to keep the yield curve under control. Indonesia, the Philippines and South Africa are among countries settling monetary policy.
The final days of Germany’s parliamentary campaign will play out before the September 24 vote.
New Zealand goes to the polls on September 23.
The S&P 500 added 0.2 percent to 2,503.78 at 9:31 am in New York. he Stoxx Europe 600 Index gained 0.3 percent, the highest in almost six weeks. The MSCI All-Country World Index increased 0.2 percent to the highest on record. The MSCI Emerging Market Index climbed 0.9 percent to the highest in more than six years.
The Bloomberg Dollar Spot Index climbed 0.1 percent. The euro increased 0.1 percent to $1.1962. The British pound declined 0.4 percent to $1.354.
The yield on 10-year Treasuries increased one basis point to 2.21 percent, the highest in more than a month. Germany’s 10-year yield gained two basis points to 0.45 percent. Britain’s 10-year yield decreased less than one basis point to 1.31 percent, the first retreat in more than a week.
Gold dipped 0.6 percent to $1,312.05 an ounce, the weakest in almost three weeks. West Texas Intermediate crude declined 0.3 percent to $49.75 a barrel.