By Rodrigo Campos
NEW YORK, Jan 13 (Reuters) – Treasury yields fell on Wednesday after Federal Reserve officials steered clear of tightening monetary conditions anytime soon despite expectations of higher inflation, while stocks and the dollar edged higher.
The U.S. benchmark yield was on track to post its first full-session decline in 2021, even as a jump in gasoline prices pushed inflation higher last month. Consumer prices are expected to run hotter in a couple of months when March and April of 2020, which saw very low inflation, fall off the yearly reading.
Several Fed policymakers pushed back against the idea of the Fed tapering its asset purchases any time soon, however.
The climb in yields is expected to resume, partly due to a massive stimulus package from the incoming administration of Democratic President-elect Joe Biden, who takes office on Jan. 20.
Stocks edged up as Europe was boosted by deals, and U.S. tech stocks were supported by a change of leadership at Intel Corp INTC.O, which jumped 7%.
On Wall Street, The Dow Jones Industrial Average .DJI fell 8.22 points, or 0.03%, to 31,060.47, the S&P 500 .SPX gained 8.65 points, or 0.23%, to 3,809.84 and the Nasdaq Composite .IXIC added 56.52 points, or 0.43%, to 13,128.95.
The pan-European STOXX 600 index .STOXX rose 0.11% and MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 0.28%.
Emerging market stocks rose 0.78%. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.68% overnight higher, while Nikkei futures NKc1 rose 0.92%.
The U.S. dollar index rose for the fourth time in five sessions, still not far from near three-year lows hit last week.
The greenback has found support from expectations of a continued economic recovery in the United States, even as countries in Europe resort to lockdowns to fend off a second COVID-19 wave.
“You are seeing a continuance of the U.S. outperformance trade,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.
The dollar index =USD rose 0.357%, with the euro EUR= down 0.42% to $1.2156.
The Japanese yen weakened 0.11% versus the greenback at 103.87 per dollar, while the British pound GBP= was last trading at $1.3635, down 0.20% on the day.
An auction of $24 billion in 30-year bonds was well bid, further pressuring yields lower.
Benchmark 10-year notes US10YT=RR last rose 13/32 in price to yield 1.0951%, from 1.138% late on Tuesday.
Oil prices fell as the threat of lower demand due to rising global COVID-19 cases outweighed support from a greater-than-anticipated drop in U.S. crude inventories.
Governments across Europe announced tighter and longer coronavirus lockdowns and curbs. The global death toll was nearing 2 million, according to a Reuters tracker.
“While I see crude prices trading higher over the coming months, investors need to be mindful that the road to higher oil demand and prices will remain bumpy,” UBS oil analyst Giovanni Staunovo said.
U.S. crude CLc1 recently fell 0.6% to $52.89 per barrel and Brent LCOc1 was at $56.04, down 0.95% on the day.
Spot gold XAU= dropped 0.4% to $1,848.05 an ounce. Silver XAG= fell 1.38% to $25.22.
Bitcoin BTC=BTSP last rose 6.73% to $36,324.69.
Emerging market assets year-to-datehttp://tmsnrt.rs/2ihRugV
Global asset performance in 2021http://tmsnrt.rs/2yaDPgn
U.S. 10-year Treasury yieldhttps://tmsnrt.rs/2LKSb2K
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
(Reporting by Rodrigo Campos; additional reporting by Sinéad Carew, Herbert Lash, Saqib Iqbal Ahmed and Leila Kearney in New York; Editing by Mark Heinrich, Alex Richardson and Jonathan Oatis)
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