In cryptocurrencies, bitcoin fell 0.89% to $79,382.45.
Meanwhile, oil prices drifted lower on the day and were on track for their first weekly decline in three weeks as traders weighed crude flows making it through the Strait of Hormuz against the deadlock in U.S.-Iran diplomacy.
U.S. crude fell 0.63% to $83.00 a barrel and Brent crude fell to $89.40 per barrel, down 0.33% on the day.
In precious metals, spot gold fell 0.61% to $4,572.99 an ounce while spot silver rose 0.71% to $69.75 an ounce.
Markets rise after Warsh remarks on inflation
- MSCI's global equities gauge rose and short-dated U.S. Treasury yields climbed with the dollar on Friday as traders added to bets for an interest rate hike after a speech by Federal Reserve Chair Kevin Warsh.
NEW YORK/LONDON, Aug. 28 (Reuters)
Warsh said at the Fed's annual economic symposium in Jackson Hole that the U.S. central bank will "have work to do" if policymakers are not confident that underlying inflation is returning to its 2% target, in remarks that acknowledged financial conditions do not appear restrictive.
After the comments, bets that rates would be raised at the September meeting rose to a 55.7% probability from 35.4% on Thursday, according to CME Group's FedWatch tool. Three Fed officials have already warned about sticky inflation, but Warsh had previously resisted giving forward guidance on the path of interest rates.
"He had to come out and say something about the policy outlook, reiterating the Fed's intent to control inflation, reinforcing the Fed's inflation-fighting credentials," said Gary Schlossberg, global strategist at Wells Fargo Investment Institute.
"He threw a lot of dots out there and when you connect them, in effect, that's what he was saying. Unless inflation rolls over, and we don't expect it to. If anything, the pressure may build a bit over the next 6 to 8 months. He didn't come right out and say it, but all the ingredients seem to be there at this point for at least one rate increase, if not more, going forward."
Wall Street stocks and global equities advance
Among Wall Street indexes, at 11:09 a.m. ET the Dow Jones Industrial Average rose 162.95 points, or 0.30%, to 53,732.39, the S&P 500 rose 29.12 points, or 0.38%, to 7,760.11 and the Nasdaq Composite rose 111.40 points, or 0.41%, to 26,652.75.
MSCI's gauge of stocks across the globe rose 2.76 points, or 0.24%, to 1,157.46 while the pan-European STOXX 600 index rose 0.56%.
Short-dated Treasury yields and the dollar gain
In the bond market, the 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 7.84 basis points to 4.312%, from 4.232% late on Thursday.
The yield on benchmark U.S. 10-year notes rose 2.01 basis points to 4.692%, while the 30-year bond yield fell 0.73 basis points to 5.1837% from 5.191% late on Thursday.
“Markets took it a bit hawkishly. We saw the market price in more hikes,” said Molly Brooks, U.S. rates strategist at TD Securities. “The one hawkish thing to note is that he did mention that the labor market is stable and output is strong, and then obviously they're concerned around inflation, so I think that's what led markets to view this as somewhat hawkish.”
In currencies, the U.S. dollar extended gains after Warsh hinted that rate hikes may be needed.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.36% to 99.47, with the euro down 0.35% at $1.161.
Against the Japanese yen, the dollar strengthened 0.33% to 159.92.
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