Dollar climbs, Treasuries fall as Fed looms with stocks mixed

The Standard & Poor’s 500 Index gyrated near its average price for the past 200 days as attention focuses on the Fed’s assessment of the American economy and its ability to withstand tighter monetary policy. European shares slipped a second day. The dollar climbed versus the yen on speculation Japan could lower rates further into negative territory, while the pound weakened amid a lower growth outlook for the U.K. Oil rebounded past $37 a barrel.

Economists now anticipate two rate increases this year, with the odds of a hike after today’s meeting near zero, according to Bloomberg surveys. Data Wednesday bolstered the case for tightening this year with inflation creeping toward the Fed’s targets. Investors will focus on clues on the timing of future increases and how Fed Chair Janet Yellen characterizes global growth and the financial-market turmoil that sent stocks to the worst start to a year on record.

“Confidence in the economy with measured rate increases and data dependency is what everyone is expecting and looking for,” said Larry Rosenthal, who oversees $600 million as president of Rosenthal Wealth Management Group. “It’s a tricky balance. If the Fed says, everything looks good, then instantly everyone is worried about a rate increase. But if the Fed says, we will be as cautious as we can and not take away the punch bowl, then they’re saying the economy is weak.”

The Federal Open Market Committee is scheduled to issue its statement at 2 p.m. in Washington. Yellen will hold a press conference at 2:30 p.m. It will be the third major central-bank policy event since Thursday, following an unprecedented stimulus package unleashed by the European Central Bank, and after the Bank of Japan held off from adding more to its record stimulus. The Bank of England meets tomorrow.

“There’s a solid consensus that the Fed won’t raise rates today, but we’re looking out to the rest of the year and the markets are doing that, too,” said Anna Rathbun, director of research for CBIZ Inc.’s retirement plan services unit in Cleveland, Ohio. The firm manages about $10 billion. “The market is looking at these inflation numbers and thinking another rate hike is probably due. If Yellen acknowledges global markets and the risks from the outside, investors will feel more comforted.” 

Stocks

The S&P 500 was little changed at 10:04 a.m. in New York, after yesterday posting the first back-to-back declines this month. The index has climbed 10 percent since a February low, though it remains 5.4 percent below its all-time high in May. The gauge is down 2.7 percent since the Fed’s December meeting, when the central bank raised rates for the first time in almost a decade.

A report today showed consumer prices excluding food and fuel climbed more than forecast in February for a second month. Separate data showed new-home construction rose more than economists forecast during the same period. The U.S. data comes amid signs that growth in China and Europe continues to lag expectations despite unprecedented monetary stimulus.

Banks helped drag the Stoxx Europe 600 Index 0.6 percent lower. Credit Suisse Group AG led declines among banks, sliding 6.3 percent, with four Europe-based traders citing the absence of Chief Financial Officer David Mathers from a conference in London as a reason for the drop. Deutsche Bank AG slipped 6 percent after co-Chief Executive Officer John Cryan said the lender may post a loss for the year as it overhauls its business.

The Bloomberg Commodity Index, which measures returns on raw materials, rose for the first time in three days as oil futures climbed. West Texas Intermediate crude gained 2.2 percent to $37.13 a barrel, after sliding 5.6 percent in the previous two days as Iranindicated it won’t be joining other major producers in freezing output.