tiptrot.com October 23, 2017

Asia stocks edge lower, focus turns to China markets after ratings cut

23 September 2017, 12:33 | Cedric Leonard

Nikkei probes more than 2-year highs as yen eases, Apple suppliers fall

US dollar surges after Fed policy statement

Yellen says she expects growth to rebound as the rebuilding process takes hold. It has also trimmed its inflation forecast.

The index that measures the greenback against a basket of six major currencies was 0.07 percent lower at 91.732 and not far from the 2-1/2-year low struck on September 8.

Meanwhile, the Bank of Japan will be on the radar as the central bank begins a two-day meeting. Wells Fargo added 74 cents, or 1.4 percent, to $53.45.

The treasury yield curve shifted upwards as a result, with the 10-year treasury yield climbing from 2.24% to 2.27%.

Signals the Federal Reserve will hike U.S. interest rates again this year and begin the "Great Unwinding" of a decade of aggressive stimulus, drove the dollar to a two-month high versus the yen on Thursday and sent bonds and commodities lower.

Bond prices fell, sending yields higher. Markets are also waiting for any hints of a rate hike in December.

The balance sheet primarily consists of government and mortgage-backed bonds. The Fed's balance sheet reduction could worsen that. The U.S. central bank intends to spend $10 billion less on bonds beginning next month, a figure that will eventually reach $50 billion a month in October 2018. Wellington slipped 0.3 percent but Taipei was up 0.6 percent. The Fed views the job market as strengthening, but it notes that inflation is running below its 2 percent annual target.

"Yes, the Fed has just told us they are going to continue tightening policy, but the likes of the European Central Bank, the Bank of Canada and even the Bank of England now have also told us that they are going to start normalizing policy", said Nelson.

Image Zoom             
                                                            |By Sinead Carew
Image Zoom |By Sinead Carew

Tokyo was following Wall Street higher, as U.S. stocks logged fresh records in advance of this week's meeting of the Federal Reserve, which is expected to announce a drawdown of its massive bond holdings. I doubt that's what happens though, and I think that most of the market feels the same way.

The Federal Reserve is leaving interest rates alone to give the economy room to keep growing. Johnson Controls rose 3 percent and American Airlines rose 2.3 percent.

Broad declines were reported in consumer staples, utilities and information technology shares.

The large-cap S&P 500 Index (NYSEARCA:SPY) rose 0.1% to close at 2,508.24, its fourth straight record close.

THE FED: Investors have their eye on the Federal Reserve, which was holding a two-day meeting of its policymakers.

Expectations for the Fed to raise interest rates in December have risen since. It is conceivable, however, that in the near future, the Fed could be forced to cram more rate hikes in a shorter time frame-something it wants to avoid.

Unigestion investment manager Olivier Marciot, approved of the clarity in the Fed's meeting minutes: "As expected, the Fed left rates unchanged tonight but finally provided clearer details on how it will start unwinding its huge balance sheet".

The cause of the spike in the United States dollars was arguably the fact that the dot plot or perceived course of hikes from the Fed continued to expect one hike this year and three next year.

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