By Sinéad Carew and Tom Wilson
NEW YORK/LONDON (Reuters) – MSCI’s global stock index hovered in a narrow range while U.S. Treasury yields rose after U.S. Federal Reserve Chairman Jerome Powell said more good data would strengthen the case for rate cuts , but gave no indications about the timing of the relaxation.
Wall Street’s two biggest indexes made small gains, adding to their streak of record highs, but still ended the day closer to session lows than session highs.
Powell appeared increasingly confident that inflation would return to the Fed’s target and pointed to risks to the labor market and economy if rates remain too high for too long, but said on the first day of his election campaign gave no signal about the timing. two days of testimony in Congress.
“He’s starting to cut rates. The question is exactly when. That’s something he won’t be able to answer. He says we need more data, but we don’t know how much more,” said Brian Jacobsen, chief economist. at Annex Wealth Management in Brookfield, Wisconsin.
While Jacobsen didn’t expect any major changes from Powell, the comments may have been “a mild disappointment for people who were hoping he would provide more clarity” on how much more data the Fed needs for confidence to cut rates, he said.
Traders now expect a roughly 70% probability that the Fed’s first rate cut will occur in September, down slightly from 71% on Monday, according to CME Group’s (NASDAQ:) FedWatch tool.
On Wall Street, shares fell 52.82 points, or 0.13%, to 39,291.97, with gains down 4.13 points, or 0.07%, to 5,576.98 and gains down 25.55 points, or 0.14%, to 18,429.29.
The benchmark S&P 500 recorded its fifth straight record high, while the tech-heavy Nasdaq’s advance on Tuesday represented its sixth straight record high.
The MSCI index for shares around the world fell 0.31 point, or 0.04%, to 817.83 and the European index closed earlier 0.9% lower.
Also on Tuesday, Treasury Secretary Janet Yellen told U.S. lawmakers that rent and housing costs are keeping U.S. inflation higher than desired, but consumer prices will continue to decline over time as factors such as supply issues and the tight labor market have decreased.
With borrowing costs in mind, investors awaited Thursday’s consumer price report as they hope for an easing in inflation to put the Fed in a better position to cut rates. Headline inflation for June is expected to slow to 3.1% from 3.3% in May, with core inflation stable at 3.4%.
After four straight days of declines, 10-year Treasury yields rose slowly on Tuesday, thanks to Powell’s more cautious tone, while longer- and shorter-term Treasury yields also rose.
“The market expected Powell to be a little more dovish given the recent set of data that was on the softer side. That was a little less the case,” said Thomas Urano, co-chief investment officer and managing director at Sage Advisory. in Austin, Texas.
The yield on U.S. 10-year benchmark bonds rose 2.9 basis points to 4.298% from 4.269% late Monday, while the yield on 30-year bonds rose 3.2 basis points to 4.49%.
The yield, which typically tracks with interest rate expectations, rose 0.8 basis point to 4.6264%, up from 4.618% late Monday.
In currencies, the dollar rose as Powell gave no clear signal that the US central bank is about to cut rates, even as he acknowledged progress in inflation.
The , which measures the dollar against a basket of currencies including the yen and euro, rose 0.13% to 105.11, while the euro fell 0.07% to $1.0814.
Against the Japanese yen, the dollar strengthened 0.29% to 161.28.
Oil prices fell on Tuesday after a hurricane that hit a key US oil-producing center in Texas caused less damage than markets had feared, easing concerns about supply disruption.
fell 1.12% or 92 cents to $81.41 per barrel to end at $84.66 per barrel, down 1.27% or $1.09 on the day.
Gold prices were choppy, rising 0.22% to $2,364.08 an ounce after an earlier decline.
In cryptocurrencies, bitcoin gained 2.92% to $57,901.01.
