By Sinéad Carew and Tom Wilson
NEW YORK/LONDON (Reuters) -MSCI’s global equities index lost some ground on Tuesday and U.S. Treasury yields ticked higher after U.S. Federal Reserve Chair Jerome Powell said more good data would strengthen the case for rate cuts without giving a clear time line.
Powell’s statement ahead of his appearance in Congress appeared to show increasing faith that inflation would return to the Fed’s target and pointed to risks to the job market and the economy if interest rates stay too high for too long.
But equities lost a little ground while Treasury yields rose as some investors had been hoping for clearer guidance at the start of the hearing scheduled for Tuesday and Wednesday.
“He’s beginning to tee up a rate cut. The question is exactly when. That’s something he’s not going to be able to answer. He says we need more data but we don’t know how much more,” said Brian Jacobsen, chief economist at Annex Wealth Management in Brookfield, Wisconsin.
While Jacobsen wasn’t expecting any big changes from Powell, the comments may have been “a slight disappointment for people who were hoping he’d give greater clarity” about how much more data the Fed needs for confidence to cut rates, he said.
Traders are now baking in a 71.8% probability that the Fed’s first rate cut would come in September, up slightly from 71% on Monday, according to CME Group’s FedWatch tool.
At 11:22 a.m. (1522 GMT), the Dow Jones Industrial Average was down 115.76 points, or 0.29%, at 39,229.03, the S&P 500 gained 7.46 points, or 0.13%, to 5,580.31 and the Nasdaq Composite was up 42.10 points, or 0.23%, to 18,445.84.
MSCI’s gauge of stocks across the globe fell 0.36 points, or 0.04%, to 817.78 while Europe’s STOXX 600 index fell 1.01%.
Investors will also be watching U.S. consumer price data due on Thursday for further signs of easing in inflation. Headline inflation for June is expected to slow to 3.1%, from 3.3% in May, with core inflation forecast steady at 3.4%.
Benchmark 10-year Treasury yields inched higher after Powell’s statement.
The yield on benchmark U.S. 10-year notes rose 6 basis points to 4.329%, from 4.269% late on Monday while the 30-year bond yield rose 5.9 basis points to 4.5173%.
The 2-year note yield, which typically moves in step with interest rate expectations, rose 3.6 basis points to 4.6536%, from 4.618% late on Monday.
In currencies, the dollar gained as Powell did not give a clear signal the U.S. central bank is close to cutting rates even as he acknowledged progress in inflation.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, gained 0.19% to 105.17.
The euro was down 0.13% at $1.0808 while against the Japanese yen, the dollar strengthened 0.4% to 161.46.
Oil prices slipped on Tuesday after a hurricane that hit a key U.S. oil-producing hub in Texas caused less damage than markets had expected, easing concerns over supply disruption.
U.S. crude lost 0.5% to $81.92 a barrel and Brent fell to $85.26 per barrel, down 0.57% on the day.
Gold prices lost some ground with spot gold falling 0.29% to $2,351.29 an ounce. U.S. gold futures gained 0.22% to $2,360.30 an ounce.
(Reporting by Sinéad Carew in New York, Tom Wilson in London, Stella Qiu in Sydney; Editing by Jamie Freed, Sherry Jacob-Phillips, Louise Heavens, Chizu Nomiyama and Emelia Sithole-Matarise)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.