World stock prices held near record highs on Wednesday, while U.S. bond yields flirted with their lowest levels in a month, as investors bet the Federal Reserve is some way off from tapering its economic stimulus.
MSCI’s all-country world index last stood at 716.64, after scaling an intraday high of 718.19 on Tuesday, led by gains in European stocks.
In Asia, the MSCI’s broadest index of Asia-Pacific shares outside Japan ticked down 0.15% and Japan’s Nikkei average shed 0.25%.
On Wall Street on Tuesday, the S&P500 was steady and near its record high as investors looked to Thursday’s inflation data.
The 10-year U.S. debt yield, on the other hand, fell to 1.513%, its lowest level in a month, and down a quarter of a percentage point from a 14-month peak of 1.776% hit in March. It last stood at 1.533%, almost flat so far on Wednesday.
“As the recovery in the job market is contained, any discussion at the Fed on tapering is unlikely to gain momentum, even if it starts soon,” said Naokazu Koshimizu, senior rates strategist at Nomura Securities.
“So those who had bet on steepening of the yield curve are unwinding their positions while some investors are also now buying to earn carry.”
U.S. payrolls data last Friday showed job hiring did not grow as fast as economists had expected, despite growing signs of a labour shortage.
Many analysts think more evidence of strong jobs growth would be required for the Federal Reserve to step up its discussion on tapering.
The U.S. central bank has said rises in inflation this quarter would be transient and would not threaten price stability, one of its key mandates.
Thursday’s U.S. consumer price data is expected to show the overall annual inflation rate rose to 4.7% and core inflation increased to 3.4%.
While those readings will be well above the Fed’s inflation target of 2%, many economists expect the inflation rate to ease in coming months, allowing the Fed to wait before taking any tapering measures.