Stocks Stable, US Futures Up While Powell Waited: Markets Unwind

(Bloomberg) — Asian stocks were stable Friday and US futures rose ahead of a key Federal Reserve meeting that could offer clues as to the timeline for phasing out the stimulus.

MSCI Inc.’s Asia-Pacific Meter. posted gains, with equities rising in China, where the central bank supported sentiment after signaling targeted moves to soften the economy. S&P 500 and Nasdaq 100 futures advanced and European contracts had changed little as traders awaited Fed Chair Jerome Powell’s speech at the Jackson Hole symposium.

President Joe Biden’s advisers are considering backing Powell for a second term, people familiar with the matter said, a move that could bolster expectations of continuity in an accommodative monetary policy.

Treasury yields fell and the dollar fell. A deluge of Treasury options expiring Friday raises the prospect of volatility following Powell’s comments. Some Fed officials overnight said the time to wind down stimulus is near, weighing in on the S&P 500, which fell from an all-time high.

The recovery from the pandemic and high inflation support calls for monetary policy to normalize. But the recent spread of the delta virus strain has complicated the economic reopening. Markets are waiting to see how Powell balances these competing factors in his comments.

While the investor vote for Jackson Hole “arguably points to an accommodative enough Fed propensity to keep markets supported, poor trading in US bond markets this week suggests latent caution and sideline bias seeking greater clarity,” Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore, wrote in a note.

Among Fed officials, Dallas president Robert Kaplan said he favors the start of phasing out in October or soon after. James Bullard of St. Louis called for a fall start. Esther George of the Kansas City Fed pushed for an early start to this year. None of them will vote on policy in 2021.

West Texas Intermediate crude oil had its best week since October. Gold climbed above $1,800 an ounce. Bitcoin traded around $47,000.

Here are some events to watch this week:

Fed officials attend the Jackson Hole Economic Policy Symposium on Friday, July US data on personal income and expenses on Friday. Investors will be scrutinizing the consumer spending price index, an inflation measure that the Fed is closely monitoring.

Read our MLIV blog for more market analysis.

Some of the key moves in markets:

Shares

S&P 500 futures were up 0.3% as of 7:12 a.m. in London. The S&P 500 fell 0.6%. Nasdaq 100 futures added 0.3%. The Nasdaq 100 fell 0.6% The Japanese Topix index lost 0.3% The Australian S&P/ASX 200 index remained flat South Korea’s Kospi index rose 0.2% Hong Kong’s Hang Seng index rose 0 .1% China’s Shanghai Composite Index rose 0.5% Euro Stoxx 50 futures had changed little

currencies

The Bloomberg Dollar Spot Index fell 0.1% The euro was at $1.1762 The Japanese yen was at 109.99 per dollar The offshore yuan was at 6.4820 per dollar

bonds

10-year Treasury yield fell one basis point to 1.34%

Raw materials

West Texas Intermediate crude was $68.59 a barrel, up 1.7% Gold was $1,803.08 an ounce, up 0.6%

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