Bonds steady before Fed's Powell speaks on Friday

Bonds steady before Fed's Powell speaks on Friday

Powell doesn't have to say a lot, or mention Trump by name.

Markets largely shrugged off the legal drama engulfing President Donald Trump and US stocks remain close to all-time highs amid double-digit corporate profit growth. Investors will study them to see whether policymakers discussed issues such as trade policy and the shape of the US yield curve, which has come close to inverting. They were trading at 2.8207 percent, compared with Tuesday's close of 2.844 percent.

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.

MSCI's all-country world stock index was unmoved by the uncertainty, rising 0.3 percent after the S&P 500 hit a record intraday high of 2,873.23 points, topping the 2,872.87 set on January 26. Its relentless rise highlights the divergence in fortunes between US stocks - turbo-charged by tax cuts and share buybacks - and the rest of the world.

Year-on-year earnings growth in the USA is expected to be about 24% this year. Emerging-market shares rallied. But that's not Trump's argument, and it's not his to make in the first place.

His speech will be watched for any new indications on the Fed's planned pace of rate hikes, as well as any response to criticism by U.S. President Donald Trump, who told Reuters on Monday that he was "not thrilled" with rate increases under Powell. The Japanese yen JPY= weakened 0.20 percent versus the greenback, at 110.53 per dollar.

The dollar index fell 0.3 percent to 94.98, while the euro hit a two-week high against the greenback, at $1.1605.

"If you look at the transmission from economic growth to earnings growth to shareholder returns, it's strongest in the United States, it's OK in Europe and pretty weak in EM", said Kilmurray, who has been underweight emerging markets for five years. "China is probably going to wait and kick the can down the road until we get there and then see what happens". "Our answer to that is no, these issues have been local issues", he said.

Shares in Europe rose slightly, with the blue-chip FTSE 100 .FTSE gaining 0.11 percent while the pan-European FTSEurofirst 300 index .FTEU3 closed flat.

Federal Reserve Chairman Jerome Powell's primary job is to ensure low and stable prices as well as low unemployment - but most economists agree that he can only do that in the long run if the central bank remains politically independent. "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".

Oil prices rose more than 2 percent, with Brent hitting a two-week high, after USA government data showed a larger-than-expected draw in domestic crude inventories and as Washington's sanctions on Iran signaled tightening supplies.

Copper prices declined ahead of the trade talks.

Futures on the FTSE China A50 Index rose 0.3 percent.

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