US Treasury yields decline even after Fed minutes reveal bullish economic outlook

Investors have penciled in a 70% chance of a rate hike at the central bank's March meeting and have now priced in slightly higher chances of another move by December.

However, "a number of participants expressed uncertainty about the magnitude of the effects of tax reform on consumer spending" as well as on capital spending, it said.

The Federal Reserve in December forecast three rate hikes in 2018 but minutes of that central bank meeting released Wednesday (https://www.federalreserve.gov/monetarypolicy.htm) show a distinct lack of unity with the projection.

US stocks climbed to record highs, gold fell and the dollar extended gains as the minutes from the Federal Reserve's December policy meeting showed officials continued to back gradual interest-rate increases.

In addition, Fed officials discussed the possibility that President Trump's tax changes could cause inflation pressures to rise. "They will continue the same tack".

Spreadex analyst Connor Campbell said: "The ISM reading joins yesterday's Markit PMI in suggesting the U.S. manufacturing sector had a very strong end to 2017".

The precious metal marked its highest since September at $1,321.33 on Wednesday, but declined as the U.S. dollar recovered from more than 3-month lows.

Benchmark US Treasury 10-year notes last rose 6/32 in price to yield 2.4452 per cent, from 2.465 per cent late on Tuesday.

The 30-year bond last rose 18/32 in price to yield 2.7824 per cent, from 2.81 per cent late on Tuesday.

MSCI's gauge of stocks, which tracks shares in 47 countries, gained 0.46 per cent. In 2017, the index's best year since 2009, it set scores of record highs and rose by one-fifth in value.

The benchmark S&P 500 breached the 2,700-mark for the first time yesterday, while the Nasdaq Composite and the Dow Jones Industrial Average also broke records as tech stocks climbed amid indications of strong economic growth in the United States and overseas.

With the minutes release, stocks held onto their earlier gains (http://www.marketwatch.com/story/dow-flirts-with-fresh-records-as-traders-wait-for-fed-minutes-2018-01-03).

-The S&P 500 index climbed 0.6 percent to close at a record 2,713.07 as of 4:05 p.m.in NY, while the Dow Jones Industrial Average gained 0.4 percent to 24,922.68 and the NASDAQ Composite index rose 0.8 percent to 7,065.531. The pan-European STOXX 600 index . "This news helped lift a previously flagging dollar, with the greenback taking 0.7% back off the pound and 0.4% off the euro, allowing the currency to ease, if in no way erase, its recent woes". The US dollar's 10 per cent drop in 2017 was the largest annual decline in 14 years. United States gold futures fell 0.09 per cent to US$1,314.90 an ounce.

-West Texas Intermediate oil for February delivery rose $1.26 to settle at $61.63 a barrel on the New York Mercantile Exchange, the highest close since December 2014.

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