USA government bonds edged lower Tuesday as investors registered a muted reaction to Federal Reserve Chairwoman Janet Yellen’s latest speech on inflation and monetary policy. Yellen’s comments reflected those from a paper released this week from the San Francisco Fed, where economists anxious that a lower “neutral rate”, or that which keeps the economy in equilibrium, also limits the monetary policy options. Economic data over the next two months will be key in the Fed’s decision-making. “What the speech seemed to do is give you a lot of different scenarios, all of which will be the job for the new Fed chair to handle”.
Separate report showed that the consumer-confidence index slipped to 119.8 from a revised 120.4 in August, hurt in part by hurricanes Irma and Harvey.
Against other major currencies, the ringgit was mostly lower except against the Japanese Yen as it rose to 3.7493/7539 this morning from 3.7649/7686 on Tuesday.
Yellen’s comments combined with a rise in U.S. Treasury yields and reduced fears over North Korea helped make the U.S. Dollar a more attractive investment.
Still, Yellen said the policymaking Federal Open Market Committee “continues to anticipate that, with gradual adjustments in the stance of monetary policy, inflation will rise and stabilize at around 2% over the medium term”. Platinum for October’s delivery shed $15.50 dollars, or 1.65 percent, to settle at $924.70 an ounce.
Demand for Treasurys softened a day after the 10-year yield responded to heightened tensions between the USA and North Korea and a surprisingly strong showing by a nationalist party in the German elections by logging its largest one-day decline since September 7. U.S. gold futures for December delivery fell 0.7% to $1,293.
Oil prices were slightly higher during Asian trading, with Brent crude last down 0.9% at $57.92 per barrel and West Texas Intermediate losing 0.25% to $51.75.
And, in other positive news for United States investors, the price of West Texas Intermediate (WTI) oil rose late Tuesday, on news that United States oil stock piles have fallen in recent weeks. USA crude stocks were reduced by 761,000 barrels last week, the American Petroleum Institute announced on Tuesday.
Germany’s benchmark 10-year bond yield was up 2 basis points at 0.43 per cent, pulling further away from an 11-day low hit on Monday at 0.395 per cent. Durable-goods orders, mortgage applications, pending home-sales levels and crude oil inventory figures are all coming up from the world’s largest national economy.