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Cape Town - The dollar slipped and Treasuries edged higher amid data showing tepid business investment in the US even as consumers stepped up spending in the fourth quarter. American stock futures were little changed before Donald Trump’s policy speech.
The greenback retreated versus most major peers after revised growth data indicated slower investment by businesses offset stronger household purchases. The odds for a March interest-rate hike slipped below 50%, with yields on Treasuries little changed on Tuesday.
Shares of raw-material producers fell as the outlook for industrial metals worsened, while construction companies rose a second day after Trump said on Monday he’ll spend “big” on infrastructure.
Even as global equities climbed to record levels, investors have remained wary as they await details of Trump’s economic policies and watch for signals on the timing for higher rates.
The White House began sketching out plans on Monday, as Trump followed promises of infrastructure spending with a caution that tax details won’t become clear until after the costs of repealing the Affordable Care Act are known.
“Tonight is going to be about laying out the agenda,” Paul Kavanagh, chief executive officer of Patronus Partners in London, said in an interview on Bloomberg radio. “The bond markets and the stock markets are going to be listening.
To push through on many of the initiatives that he’s looking for over the next few months, he’s got to be relatively downbeat about the things that he will want to change.”
Fed Bank of Dallas President Robert Kaplan said policy makers should raise interest rates “sooner rather than later” and not pay excessive attention to market expectations. The chance of a rate hike at the central bank’s March 14 to March 15 meeting jumped to 50%, federal funds futures showed, from 34% just five days ago.
What’s coming up this week:
Trump is expected to outline his priorities for the nation in an address before a joint session of Congress on Tuesday night in the US Fed officials are making speeches this week, including chair Janet Yellen who addresses an event in Chicago on Friday.
This week’s economic data include US personal income and spending. India and Australia will report on fourth-quarter GDP. China’s PMI data are expected to show continued expansion.
Here are the main moves in markets:
Stocks
Futures on the S&P 500 Index declined 0.1% at 14:34. The index closed Monday at a record. The Stoxx Europe 600 Index was little changed after four straight days of losses. The index is still up 2.6% for February.
Asia stocks erased gains after Japan’s Topix gave up almost all of a 1% rise, with the steepest paring coming in the final half hour of trading. The MSCI Asia Pacific Index trimmed its monthly gain to 2.2%.
Currencies
The Bloomberg Dollar Spot Index fell 0.2%. The yen added 0.4% to ¥112.70/$, after sliding 0.5% on Monday to snap a three-day winning streak. The British pound slipped 0.2% to $1.2420. The currency is down 1.3% for the month.
Bonds
Yields on 10-year Treasuries rose one basis point to 2.36% after climbing five basis points on Monday. European government bonds traded in a tight range. The German 10-year yield rose one basis point to 0.21%. Peripheral bonds extended Monday’s gains as 10-year Italian yields fell three basis points to 2.1%.
Commodities
West Texas Intermediate Crude fell 0.3% to $53.90 a barrel. Brent Crude retreated 0.5% to $55.67. Gold climbed less than 0.1% to $1 253.49 an ounce. The metal has gained 3.5% in February, its second monthly advance.
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