U.S. Stocks Rise With Dollar as Treasuries Slip: Markets Wrap

  • Risk-on tone persists, though moves limited before Fed meeting
  • Trump set to address North Korea in first UN appearance

Pimco's Crescenzi: Rates Anchored by New Neutral

U.S. stocks advanced to fresh records, while the dollar halted a two-day drop and Treasuries slipped as investors remained optimistic about the economy. Gold fell as demand for havens faded.

The S&P 500 Index held above 2,500 to notch a fresh record after briefly losing an advance that reached 0.3 percent. The Dow Jones Industrial Average added to its all-time high. Earlier, equities from Asia to Europe gained. The dollar climbed versus the euro and pound. The 10-year Treasury yield hit 2.23 percent. Gold tumbled, while oil was little changed.

Markets maintained a risk-on stance after last week’s gains, with investors turning attention to this week’s Federal Reserve meeting. 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’s Francine Lacqua and Tom Keene. “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 U.S. 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 U.S. President Donald Trump’s first address before the United Nations on Tuesday.

Terminal subscribers can read more in our Markets Live blog.

What to watch out for this week: 

  • U.K. 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 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 Sept. 24 vote. New Zealand goes to the polls on Sept. 23.

Here are the main moves in markets:

Stocks

  • The S&P 500 rose 0.1 percent to 2,504 at 4 p.m. in New York.
  • The 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 0.8 percent to the highest in more than six years.

Currencies

  • The Bloomberg Dollar Spot Index climbed 0.3 percent.
  • The euro slipped 0.1 percent to $1.1931.
  • The British pound declined 0.8 percent to $1.3483. Bank of England Governor Mark Carney reiterated that inflationary pressure may be mounting.

Bonds

  • The yield on 10-year Treasuries increased two basis points to 2.23 percent, the highest in more than a month.
  • Germany’s 10-year yield rose two basis points to 0.455 percent.
  • Britain’s 10-year yield decreased one basis point to 1.30 percent, the first retreat in more than a week.

Commodities

  • Gold futures fell 1.1 percent to $1,311.50 an ounce, the weakest in almost three weeks.
  • West Texas Intermediate crude hit a wall at $50 a barrel and settled at $49.91.

— With assistance by Samuel Potter, and Andreea Papuc

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