Published: Thu, February 22, 2018
Business | By Max Garcia

Fed's Harker sees two United States rate hikes this year

Fed's Harker sees two United States rate hikes this year

"Most (Federal Open Market Committee) members viewed the recent data bearing on real economic activity as suggesting a modestly stronger near-term outlook than they had anticipated at their meeting in December", showed minutes of Fed's policy meeting on January 30-31 released on Wednesday, Xinhua reported.

He added the pair may close above 108.50 if the Fed minutes provide insight as to why officials said the word, "further" twice to their statement on gradual adjustment in interest rates.

Advance Auto Parts vaulted 8.2 percent after reporting better earnings than analysts were expecting. But many analysts now think the Fed may accelerate its rate increases and boost rates four times this year.

Stocks initially reacted positively, with each of the major Wall St indexes touching session highs. The New Zealand dollar gained 0.07 percent to 0.7342.

The kiwi gained to US73.77 cents after the Fed minutes were released at about 8am (NZT) from 73.34 cents late today.

But that turned out to be a knee-jerk reaction as they have fallen significantly since then - after United States 10-year treasury bonds lifted to a four-year high of 2.952 per cent.

USA crude oil futures settled at $61.68 per barrel, down 11 cents, or 0.18 percent.

Germany's DAX lost 0.3 percent, however, still spooked by the recent rises in bond yields.

Two-year T-note yields also held near a nine-year high at 2.25%.

USA crude hit a near two-week high the previous day on news of inventory declines at a key storage hub and from expectations that top OPEC producers could extend cooperation beyond 2018.

The 10-year Treasury yield, which edged lower soon after the report, rose 4 basis points to 2.94%, hitting fresh four-year highs.

The Standard & Poor's 500 index rose 19 points, or 0.7 percent, to 2,735.

And inflation, while still below the Fed's 2-percent goal, should meet or exceed that objective by the end of 2019, he forecast.

The index has bounced 0.9 percent so far this week after slumping 1.5 percent the previous week to a three-year low. It advanced 0.4 per cent to $1.2702, its highest level this year versus the Canadian dollar.

Despite the Fed's latest upbeat assessment on the world's largest economy, investors chose to focus on the prospect the pace of interest rate increases will speed up.

Shopify Inc was the worst performer on the index, sliding 6.7 per cent after it priced a US$657.6 million share offering. The index has bounced nearly 1 per cent so far this week, after slumping 1.5 per cent the previous week to its lowest level in three years.

Despite a 0.47 per cent retreat in gold futures, reversing an earlier increase, Kirkland Lake Gold, Guyana Goldfields and OceanaGold Corp retained their gains to be among the 10 biggest advancers on the Toronto exchange.

The dollar index, which tracks the greenback against a basket of major peers, rose 0.4 per cent to 90.08.

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