US equities rebounded after New York Federal Reserve (Fed) President John Williams (NYSE:WMB) said that central bankers should ‘act quickly to lower interest rates at the first sign of economic distress’. Although a 25-basis-point rate cut would perhaps do as a ‘preventive measure’ to support the economy, equity investors thought otherwise. The US 10-year yield eased to 2.02%. The probability of a 50-basis-point cut in FOMC’s July meeting rose to 40%. The S&P500 gained 0.36% and Nasdaq closed 0.27% higher.
Gold surged to $1350 for the first time since May 2013 on tumbling US yields.
Yen and Swiss franc lagged as risk-on trades poured in. The inflation in Japan slowed to the weakest levels in nearly two years. The inflation excluding fresh food, closely monitored by the Bank of Japan (BoJ) eased from 0.8% y-o-y to 0.6% in June. The USDJPY rebounded from a three-week low (107.21).
The S&P, Dow and Nasdaq futures followed up on gains in the Asian trading session.
The FTSE futures traded 0.42% up. Brent crude edged 2% higher on growing tensions in the Straits of Hormuz after the US downed an Iranian drone.
The FTSE is expected to open 32 point higher at 7530p in London.
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