Meanwhile, U.S. services industry activity accelerated in December with the Institute for Supply Management s non-manufacturing activity index rising to a reading of 57.2 last month from 55.9 in November.
A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of U.S. economic activity The index is now close to its 57.3 level in February before the coronavirus pandemic sent the U.S. economy into a tailspin.
The rise in yields came after a projected win for the Democrats of two Senate seats in the Georgia runoff elections, according to NBC News. These projected victories give the Democrats a slim majority in the Senate, with a 50-50 seat split and Vice President-elect Kamala Harris as the tiebreaking vote. The Democrats will have unified control of Congress and the White House, as Biden takes office.
By Jonnelle Marte, Ann Saphir and Howard Schneider
(Reuters) - A recent rise in U.S. bond yields and market inflation expectations has bolstered Federal Reserve officials hopes that the central bank s new monetary policy approach is taking hold and could be further buoyed if a Democratic-led Congress rolls out more spending. I am encouraged to see the rise in market indicators of inflation expectations. . That is what we are trying to support, Richmond Federal President Thomas Barkin said on Thursday in an interview with Reuters.
Barkin said he regarded a recent rise in interest rates on Treasury bonds as also part of a reflation trade, a sign that investors were factoring future hikes in prices into their decisions by demanding higher interest rates, rather than representing a worrisome tightening of financial conditions.
Fed will be tested in 2021 as vaccines boost US economic outlook
In its final policy meeting of the year this week, the U.S. central bank is expected to keep its key overnight interest rate pinned near zero and to signal it will stay there for years to come; many analysts also expect new guidance on how long the Fed will keep up its massive bond-buying program. Reuters
Source: Reuters
If 2020 was the year the Federal Reserve overhauled its game plan for supporting the U.S. economy, 2021 will be the year its new approach gets tested should a coronavirus vaccine deliver the lift that many analysts expect.
Fed will be tested in 2021 as vaccines boost U.S. economic outlook
If 2020 was the year the Federal Reserve overhauled its game plan for supporting the U.S. economy, 2021 will be the year its new approach gets tested should a coronavirus vaccine deliver the lift that many analysts expect.
In its final policy meeting of the year this week, the U.S. central bank is expected to keep its key overnight interest rate pinned near zero and to signal it will stay there for years to come; many analysts also expect new guidance on how long the Fed will keep up its massive bond-buying program.