The Federal Reserve is on track to gradually raise interest rates given the recent inflation weakness is fading and the US economy's fundamentals are sound, an influential Fed policymaker said on Monday, reinforcing the central bank's confident tone. The 2-year Treasury note yield TMUBMUSD02Y, +1.33% which is more sensitive to shifts in rate expectations, climbed 3.8 basis points to 1.478%.
Fed funds futures prices show investors are now solidly pricing in a rate increase at the Fed's December policy meeting, with expectations rising to 81 percent, according to CME Group's FedWatch tool.
Several other Fed officials are set to speak publicly, including Fed Governor Lael Brainard, Cleveland Fed President Loretta Mester and Atlanta Fed President Raphael Bostic. "Yellen's comments gave more certainty about another rate hike by the end of the year", said DZ Bank rates strategist Daniel Lenz. That higher tax rate is lower than the current higher rate of 39.6%.
President Donald Trump warned North Korea on Tuesday that any U.S. military option would be "devastating" for Pyongyang, but said the use of force was not Washington's first option to deal with the country's ballistic and nuclear weapons program. If passed, the plan would be Trump's first significant legislative win since taking office in January.
"That generally has traders confident that the USA economy is actually doing OK". However, she said they are making room for the possibility that they're wrong.
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In a day of scant Asian economic news the Nikkei 225 was among the day's fallers, slipping 0.3%.
Japan's Nikkei 225 fell 0.3 percent to 20,270.97 and Australia's S&P/ASX 200 lost 0.3 percent to 5,656.40.
Apple rose 1.72 per cent after four straight sessions of losses to help prop up the three major indexes, after Raymond James boosted its price target on the iPhone maker to $180 from $170. The single currency traded close to $1.21 earlier this month but was rattled by Sunday's German election, which brought the far-right Alternative for Germany (AfD) party into parliament. Platinum for October's delivery shed $15.50 dollars, or 1.65 percent, to settle at $924.70 an ounce. Treasury yields and stocks edged slightly higher.
-The S&P 500 was little changed at 2,496.84, the Nasdaq 100 Index added 0.2 percent and the small cap Russell 2000 Index gained 0.3 percent to reach a record high. Brent crude, the standard for worldwide oil prices, gained 22 cents to $58.14 a barrel in London.
The benchmark 10-year Treasury yield TMUBMUSD10Y, +2.54% rose 5.9 basis point to 2.288%, compared with 2.229% late Tuesday in NY.
China industrial profit data is due Wednesday.