NEW YORK, 7 July (Reuters) – Share prices soon recovered from a rally in U.S. trading on Wednesday and bond yields rose to a 4-1 / 2 month low, standing behind a course in American monetary policy later in the day. Early tremors raised fears that the U.S. economic recovery could slow and the COVID-19 variant could expand. These factors obscure the view that the rate of inflation may rise faster than expected, although many investors believe that the current inflation signs are temporary.
Market participants will get new insights on when and how much the US Federal Reserve will lean to fight inflation at 1800 GMT and reduce support for the economy, as it unveils minutes of its 15-16 policy meetings. Justin Ladder, an interest rate strategist at Cantor Fitzgerald in New York, said the market is leaning higher as the post-CVD economic recovery strengthens. However, he added: “The market is not ready to yield more and every small down tick will meet buyers very quickly.”
At 1650 GMT, the yield on the 10-year U.S. Treasury note fell 5.4 basis points to 1.316% from 1.2960% previously. As bond prices rise, yields fall.
Share prices spread from the bottom to still post little gains for the day. The Dow Jones Industrial Average (.DJI) rose 73.97 points, or 0.21 percent, to 34,651.34. The broader S&P 500 (.SPX) rose 14.75 points, or 0.34 percent, to 4,358.29. The tech-heavy Nasdaq Composite (.IXIC) added 16.93 points, or 0.12 percent, to 14,680.57. “There is a perception with recent economic data that even if some Fed members show a risk of tapping, the overall policy will be very loose and uninterrupted because we don’t see anything indicative of ‘too hot’,” said Washington’s Tempus Inc. Says senior FX strategist Juan Perez.
The dollar index (.DXY), which tracks the greenback against a basket of six currencies, rose 0.148 points, or 0.16 percent, to 92.694. Oil prices have continued their recent decline. Brent crude last traded down $1.16, or 1.56%, at $ 73.37. US crude fell $ 1.36, or 1.85%, to $ 72.01 a barrel.