Stocks Slip as Traders Mull Fed; U.S. Yields Dip: Markets Wrap

Bloomberg

Published Aug 22, 2019 05:30

Updated Aug 22, 2019 06:33

Stocks Slip as Traders Mull Fed; U.S. Yields Dip: Markets Wrap

(Bloomberg) -- Stocks in Asia drifted lower Thursday as investors found little in minutes from the Federal Reserve’s latest meeting to alter expectations for more aggressive interest-rate cuts. Treasury yields edged lower and the yuan weakened.

Hong Kong saw the biggest losses, with more modest declines in Japan and China. Trading activity has been reduced this week ahead of Fed Chairman Jerome Powell’s address on Friday and volume was again subdued in Treasury futures. The benchmark 10-year yield continued to fluctuate and dipped Thursday to 1.57%. Oil and the dollar were little changed.

The diverse set of views from U.S. policymakers shown in the minutes highlights the difficulties facing the Fed ahead of next month’s policy decision when investors expect another rate cut. President Donald Trump kept up his relentless attack on the central bank, claiming that “the only problem we have is Jay Powell and the Fed.” On trade, he predicted the U.S. will “probably” make a deal.

“What I think we are going to get out of Jackson Hole is a shift towards the Fed getting more flexibility and optionality,” Jack McIntyre, fixed-income portfolio manager at Brandywine Global Investment Management LLC, told Bloomberg TV. “What I mean by that is maybe sending a message to the market that they’re open to, hey, this might be a more prolonged rate-cutting cycle.”

Elsewhere, Germany’s first 30-year bond offering a 0% coupon saw weak demand on Wednesday. The British steadied after slipping amid the possibility of a so-called no-deal Brexit.

Here are some notable events coming up:

  • Thursday brings the Bank Indonesia rate decision and press conference with Governor Perry Warjiyo.
  • Flash PMIs are due for the euro area on Thursday.
  • Kansas City Federal Reserve Bank hosts its annual central banking symposium in Jackson Hole, Wyoming, starting Thursday.
Here are the main moves in markets:

Stocks

  • Japan’s Topix index fell 0.1% as of 1:30 p.m. in Tokyo.
  • Hong Kong’s Hang Seng slid 0.9%.
  • The Shanghai Composite Index fell 0.2%.
  • Australia’s S&P/ASX 200 Index gained 0.4%.
  • Futures on the S&P 500 slid 0.1%. The underlying gauge rose 0.8% on Wednesday.
  • Euro Stoxx 50 futures fell 0.1%.
Currencies

  • The yen was at 106.47 per dollar, up 0.1%.
  • The offshore yuan slipped 0.3% to 7.0855 per dollar.
  • The Bloomberg Dollar Spot Index was little changed.
  • The euro bought $1.1087.
  • The British pound was at $1.2132 after slipping 0.3%.
Bonds

  • The yield on 10-year Treasuries dipped two basis points to 1.57%.
  • Australia’s 10-year bond yield held at 0.93%.
Commodities