As the Fed is expected to keep its benchmark interest rate unchanged after its meeting on Wednesday, investors will be reassured that the central bank will continue to provide extraordinary support for the economy. Policymakers can also comment on the potential targeting of returns for certain Treasury maturities. The markets are balancing this with the OECD assessment that the economic impact of the pandemic could be more profound than expected.
“The markets were cautious before the Fed meeting and the technical indicators are tight after the recent powerful rally,” said the strategists of Crédit Agricole CIB led by Jean-François Paren in a client note. “For the moment, it seems that the control of the yield curve is the necessary condition for the markets to recover more, but this may not be sufficient in itself because it also highlights the fragility of the system in which we are currently living. ”
US infectious disease specialist Anthony Fauci added to the discomfort, warning that the coronavirus epidemic is far from over.
What to watch this week:
- The next Fed policy decision is Wednesday. Officials should leave rates above zero.
- Eurozone finance ministers meet on Thursday to discuss the EU’s recovery plan and the succession to the presidency of the Eurogroup.
These are some of the main market developments
- The Stoxx Europe 600 index fell 0.2% at 7:10 a.m. New York time.
- The S&P 500 index futures have changed little.
- Futures on the Nasdaq 100 index were up 0.4%.
- The MSCI Asia Pacific index rose 0.4%.
- The Bloomberg Dollar Spot Index fell 0.5%.
- The euro gained 0.3% to $ 1.1369 US.
- The pound rose 0.3% to $ 1.277 US.
- The Japanese yen appreciated 0.4% to 107.32%.
- The yield on 10-year treasury bills fell three basis points to 0.79%.
- The yield on 30-year Treasury bills fell three basis points to 1.54%.
- Germany’s 10-year yield fell by one basis point to -0.32%.
- The UK 10-year yield fell three basis points to 0.308%.
- Brent crude oil fell 2.1% to US $ 40.33 per barrel.
- Gold strengthened 0.2% to US $ 1,719.20 an ounce.
- LME aluminum advanced 1.7% to US $ 1,632 per metric ton.
– With the help of Andreea Papuc and Adam Haigh.