The dollar fell and global stocks were mixed as investors digested the shortlist of candidates said to be in the running for the leadership of the Federal Reserve. Spanish securities declined as concerns about the crisis in Catalonia grew.
Bond yields in the European periphery rose, following the moves in Spanish notes as most core European bond yields were steady. Catalan President Carles Puigdemont had promised a formal announcement to regional lawmakers of the referendum results, triggering a 48-hour countdown to a unilateral declaration of independence. One report said there will be a news conference at midday local time; a spokesman for the region said there is no fixed time for any hypothetical statement by Puigdemont.
“As far as market reaction is concerned the short-term effect is that investors would be reluctant to hold Spanish exposure ahead of this event risk,” said Antoine Bouvet, an interest-rate strategist at Mizuho International Plc.
Elsewhere, the euro advanced after data showed the euro-area economy picked up in September as services performed better than estimated and new orders rose at the fastest pace in more than six years.
The Bloomberg dollar index and 10-year Treasury yields both retreated from recent highs as news emerged that President Trump has been presented with a shortlist of Fed-chair candidates with a range of views on policy. Among them, ex-board member Kevin Warsh has criticized the central bank for trying to do too much with monetary policy. Current Governor Jerome Powell has voted in sync with Chair Janet Yellen, who’s term is up in February.
“Markets rightly or wrongly came to the view late last week that Warsh was the front-runner, and viewed him -- rightly or wrongly -- as having more hawkish proclivities than Janet Yellen,” said Ray Attrill, global co-head of foreign-exchange strategy at National Australia Bank Ltd. in Sydney. With news of Powell’s chances potentially rising and of headwinds to tax reform, “that’s seen the dollar giving back a little of the gains.”
Currencies
The Bloomberg Dollar Spot Index decreased 0.2 percent.
The euro increased 0.2 percent to $1.1764.
The British pound advanced 0.1 percent to $1.3256.
The Japanese yen gained 0.3 percent to 112.56 per dollar. - Bloomberg -