The dollar suffered its biggest decline in more than eight months, while U.S. stocks ended the day lower, after minutes from the latest Federal Reserve meeting indicated officials expect inflation to remain persistently low even as support for an interest-rate increase grows.
Bloomberg’s dollar spot index fell to the lowest level since October as Fed officials meeting earlier this month saw an interest-rate increase in the near term even as divisions persisted over the policy path forward amid tepid inflation. Treasuries added to gains, pushing the 10-year yield to 2.32 percent, and oil rallied.
“They are still discussing the inflation issue internally and that seems to be the major source of disagreement as one would expect,” Brad Bechtel, a currency strategist at Jefferies LLC, said in a message. “December seems firmly on the table but 2018 remains a bit of a wild card. The USD move is a bit of position unwind ahead of the long holiday weekend given that most will be out of the office.”
The S&P 500 Index fell 0.1 percent the day before Thanksgiving. Trading volume was more than 20 percent below the 30-day average.
Federal Reserve Chair Janet Yellen, who’s leaving the central bank in February, has warned that tightening monetary policy too quickly risks stranding inflation below the Fed’s 2 percent target, giving investors yet more to think about as the bond market in the world’s biggest economy hints at concern over the pace of U.S. economic expansion.
“There’s nothing antithetical about raising rates when the economy is doing well,” Mark Spellman, a portfolio manager at Alpine Funds in Purchase, New York, said by phone before the minutes came out. “We don’t have a dollar problem, we don’t have an inflation problem. This is just purely: We were at zero rate policy for so many years, emergency rates, and we’re normalizing.”
West Texas crude rose to its highest price in more than two years, as a drop in U.S. stockpiles added optimism to a rally underpinned by hopes for an OPEC deal extension.