Treasuries signal calm before FOMC; futures little changed

Bloomberg

Treasuries climbed Tuesday while US equity futures were little changed, with markets appearing unruffled ahead of a key Federal Reserve meeting.
Contracts on the S&P 500 index pared an early gain after the underlying gauge hit another record. European equities were led higher by chemical firms, while Asian stocks were mixed. The 10-year Treasury yield pulled back under 1.5%, and the dollar was steady.
The day before the Fed’s next policy decision — and possible hints about when the central bank will slow the pace of emergency asset purchases — there were few nerves on display. The statement is set to include updated forecasts, and expectations are that officials would broadcast any taper plans well in advance.
“We think that market could remain relatively complacent in a low conviction environment ahead of the Fed meeting tomorrow,” according to Xavier Chapard, global macro strategist at Credit Agricole SA. “We continue to think that starting tomorrow the Fed could be slightly less ultra-dovish than it has been. While it will try not to trigger a significant market reaction, the question is whether it will succeed.”
Economists expect the so-called dot plot to point to an interest-rate increase in 2023, while the bank is unlikely to signal a scaling back of bond purchases until later this year.
Elsewhere, crude oil traded around $71 a barrel as investors weighed the outlook for rising demand against extended anti-virus curbs in some economies.
Bitcoin continued to gyrate amid a barrage of comments, briefly climbing above $41,000 only to pull back. The digital currency got a boost after veteran hedge fund manager Paul Tudor Jones re-endorsed the coin in a television interview.
Futures on the S&P 500 Index increased 0.1% as of 9:39 am London time and the Stoxx Europe 600 Index gained 0.2%.
While the MSCI Asia Pacific Index advanced 0.3%, the MSCI Emerging Market Index was little changed.
The Bloomberg Dollar Spot Index was little changed and the euro advanced 0.1% to $1.2138.
While the British pound falls 0.1% to $1.4102, the onshore yuan weakened 0.1% to 6.402 per dollar and the Japanese yen was little changed at 110.10 per dollar.
The yield on 10-year Treasuries sinks one basis point to 1.48% and the yield on two-year Treasuries was unchanged at 0.16%. Germany’s 10-year yield dipped one basis point to -0.26%.
While Japan’s 10-year yield advanced one basis point to 0.051%, Britain’s 10-year yield declined one basis point to 0.734%.
West Texas Intermediate crude increased 0.2% to $71.02 a barrel and Brent crude gained 0.2% to $73.04 a barrel. Gold weakened 0.1% to $1,864.26 an ounce.