Dollar Stalls, Yields Ease as Stocks Trade Mixed: Markets Wrap

The dollar slipped and longer-dated Treasury yields were lower as investors awaited Thursday’s U.S. inflation report before gauging the direction of monetary policy.

The greenback weakened against six of its nine developed-world peers. The 10-year rate slipped two basis points to 1.50%. U.S. equity futures were little changed and stocks in Europe dipped. Bitcoin added 2%, trading near $34,000.

Global markets’ indecision on Wednesday signals a tug-of-war between traders who believe accelerating inflation is transitory and those who bet it’ll prove persistent enough to warrant a tapering of Federal Reserve stimulus. With stocks near record levels and U.S. yields already high relative to peers, traders find little room for maneuver. For now, the Fed’s dovish stance is calming the markets.

“Bond markets all over the world are saying that whatever happens in the headline inflation numbers, central banks are very comfortable that this inflation surge that we are seeing is going to be transitory,” Michael Jones, chief executive officer at Caravel Concepts, said on Bloomberg Television.

A rally in commodities has stalled with global recovery remaining patchy, especially with the pandemic still spreading in the developing world. The Bloomberg Commodity Index, which shows returns on a basket of raw materials, slipped 0.2%.

Shares edged up in China, where factory-gate inflation for May was at the highest since 2008 but consumer-price gains remained subdued. The nation is also considering imposing a cap on the price of thermal coal to contain high energy costs.