Published: Fri, August 24, 2018
Money | By Bruce West

Bonds steady before Fed's Powell speaks on Friday

Bonds steady before Fed's Powell speaks on Friday

Investors had a lot to digest with the conviction of Trump's former campaign chairman on eight counts of financial wrongdoing and a guilty plea by his former personal lawyer in separate cases.

"The potential for President Trump to be impeached didn't change all that much, and as a result of that the market didn't over react in this instance to that news", said Michael Arone, chief investment strategist at State Street Global Advisors in Boston. Investors will study them to see whether policymakers discussed issues such as trade policy and the shape of the USA yield curve, which has come close to inverting.

First, Trump complained to a group of donors in the Hamptons that Powell wasn't turning out to be the "cheap money" Fed chairman he had expected.

Futures on Japan's Nikkei 225 added 0.2 percent.

The index was poised for the longest-running bull market in its history. In Asian trade, it was up 0.05 percent at $1.1577 from its NY close.

Many expect this will be a pivotal moment for the US Dollar, from which the greenback will either find impetus for continued gains, or be left reeling. "It's good they are talking, but at that level of engagement we doubt anything significant will come out of it".

President Trump told Reuters in an interview on Monday that he was "not thrilled" at the Fed's rate hikes, sparking the dollar's latest downturn.

The S&P 500 Index fell less than 0.1 percent.

The MSCI Emerging Market Index fell 0.3 percent.

"If you look at the transmission from economic growth to earnings growth to shareholder returns, it's strongest in the U.S., it's OK in Europe and pretty weak in EM", said Kilmurray, who has been underweight emerging markets for five years.

A new threat of further sanctions on Russia from USA lawmakers hit the rouble and backed the market's view that Russian sanctions would increase in severity regardless of the Trump administration.

The Australian dollar dipped 0.25 percent to $0.7350 AUD=D4 after advancing 0.4 percent overnight on the back of the dollar's broad weakness. Yields on the euro zone benchmark bond hit their highest since Aug 10, tightening the gap with the U.S.as the euro zone economy showed signs of improvement. "Objects in mirror are closer than they appear is Omair Sharif's take on the FOMC Minutes, which he thinks show business as usual for now but a growing awareness of longer-term economic risks". So far nothing has come out of trade talks between the USA and China - both parties moved ahead with tariffs on $16B worth of goods so the focus shifts to the Federal Reserve's annual economic symposium at Jackson Hole.

The price of oil, one of Canada's major exports, steadied as the escalating trade war between the United States and China weighed on demand expectations a day after prices jumped on a big draw in US crude inventories.

The dollar rose for the first time in six days, pressuring commodity prices on products from copper to soybeans.

Spot gold, however, rose 0.3 percent to $1,199.5 an ounce.

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