- Haven Gains Ebb as Traders Await Fed, ECB Minutes
A shift to haven assets in the wake of North Korea’s missile test faded as investor attention turned to central banks and the impending release of minutes of the latest Fed meeting. Oil fell, ending an eight-day winning streak.
Gold and the Japanese yen gave up early gains, with both the metal and the currency retreating. The dollar rose as U.S. stock futures and Treasuries traded sideways before the Federal Reserve release, due today. The euro was also little changed and European stocks edged higher amid a slew of services data, and as investors await Thursday’s publication of the latest ECB minutes. Oil dropped as Russia was said to oppose moves to deepen OPEC cuts.
An emergency United Nations Security Council meeting on Wednesday will try to formulate a response to North Korea’s latest provocation, but markets are once again showing the capacity to quickly move beyond periods of tension on the Korean peninsula. In the wake of last week’s unexpected turn toward tightening by a number of major policy makers, investors will scour the minutes for clues not only on the path for borrowing costs, but also for the fate of central bank balance sheets.
“The FOMC minutes will be the major macroeconomic highlight as the U.S. returns from the Independence Day break,” Ipek Ozkardeskaya, a market analyst at London Capital Group, wrote in a note. “Lack of details regarding the Fed’s balance sheet policy could further weigh on U.S. yields and the dollar.”
Beyond the Fed and ECB minutes, here’s what’s coming up:
- A G-20 summit kicks off in Hamburg this week. U.S. President Donald Trump is expected to hold his first meeting with Russia’s Vladimir Putin as well as meet his Chinese counterpart Xi Jinping.
- American employers probably added around 175,000 workers in June and wage growth probably strengthened, consistent with a solid labor market, economists project the U.S. Labor Department to report on Friday.
These are the main moves in markets:
Asia
- Japanese and Hong Kong equities reversed early declines, ending higher as automakers and technology companies rose.
- The yen fell 0.2 percent, after erasing a 0.4 percent advance.
Stocks
- The Stoxx Europe 600 Index gained less than 0.1 percent after surging 1.1 percent on Monday.
- Futures on the S&P 500 Index were little changed. The underlying gauge rose 0.2 percent Monday in a shortened session before the July 4 holiday.
Currencies
- The Bloomberg Dollar Spot Index strengthened 0.2 percent.
- The British pound was 0.2 percent weaker at $1.2898. The euro also slipped 0.2 percent to &1.1326.
Commodities
- Gold dropped 0.1 percent to $1,222.35 an ounce, erasing an earlier gain of 0.5 percent.
- WTI crude fell 1.6 percent to $46.31 a barrel. Oil has rallied more than 10 percent after falling into a bear market last month.
Bonds
- The yield on 10-year Treasuries was little changed at 2.35 percent. The market was closed Tuesday.
- U.K. benchmark yields advanced four basis points to 1.28 percent.
- French and German yields were little changed.
