Feb 17 Reuters Wall Streets main indexes were set for a subdued open on Wednesday as investors stayed away from making big bets ahead of the release of minutes from the U.S Federal Reserves January meeting.
The Fed has pledged to pin interest rates near zero until inflation rises to 2 and looks set to exceed that goal, and until the economy also reaches full employment.
That supereasy stance, coupled with the Biden administrations proposed 1.9 trillion spending bill for pandemic relief, has some analysts warning of a coming surge in inflation.
While the new package may be large, it will add stimulus to an economy still below potential, and the spending will be spread out over a couple of years, said Mark Haefele, chief investment officer, UBS Global Wealth Management in Zurich, Switzerland.
So while a nearterm rise in inflation is likely, we expect the Fed to look past that and keep rates on hold.
Data showed U.S. retail sales rebounded sharply in January after households received additional pandemic relief money from the government, suggesting a pickup in economic activity after being restrained by a fresh wave of COVID19 infections late last year.
The Dow notched a record closing high on Tuesday led by gains in cyclical sectors, although concerns over rising interest rates kept the benchmark SP 500 little changed.
The reflation trade that has been good for stock markets as its driven by optimism around the recovery. But that will only continue to a point and…