New York
Global stocks were mixed and the dollar edged lower amid thin trading as investors weighed the latest comments from a Fed official on the path of borrowing costs. The British pound advanced after a selloff.
With markets in the UK, US and China all closed for public holidays, volumes were depressed across the board and most moves were muted. The pound posted the biggest gain among G-10 currencies, though not enough to erase Friday’s plunge when polls showed the coming election may be closer than expected. South Africa’s rand reversed a rally after President Jacob Zuma survived a bid by some members of his party to oust him. Italian assets fell as a former prime minister raised the prospect of an early election.
Despite the longest winning streak for US stocks since February and record highs posted by equities globally, the ongoing bond rally hints at an undercurrent of investor caution. With the fate of the Trump administration’s pro-growth stimulus plans uncertain, the dollar is one of the weakest-performing major currencies this year, even as the Federal Reserve prepares for more rate hikes. Gauging the ability of the global economy to withstand rising borrowing costs will be key for traders.
“The US economy is about as close to the Fed’s dual-mandate goals as we’ve ever been,” Federal Reserve Bank of San Francisco President John Williams said in Singapore on Monday. “With the attainment of our dual-mandate goals close at hand, it’s more important than ever for monetary policy to work toward what I like to call a ‘Goldilocks economy’ ” an economy that doesn’t run too hot or too cold.”
Markets markets were slow on Monday, a full slate of economic reports this week will give investors plenty to digest, beginning with Eurozone business and consumer confidence readings on Tuesday. China’s latest official factory and service industry purchasing managers’ indexes, out Wednesday, will be among the most watched, with analysts looking to see if the gauge indicates that manufacturing growth momentum slows further. The ISM index for US manufacturing is due a day later. US private and official payroll numbers are also scheduled for release. They’ll give fresh clues on employment and hiring in the world’s No. 1 economy and could bolster Fed policymakers’ reasoning as they prepare to gradually raise interest rates again.
