Global equity markets and Treasury yields edged higher on Thursday on bets the major central banks are done hiking rates, but markets sought guidance from Federal Reserve Chair Jerome Powell on whether monetary policy might loosen soon.
Stocks across Europe surged but the major U.S. indices traded little changed after some Fed officials on Tuesday stressed further rate hikes are possible if inflation doesn't decelerate closer to the U.S. central bank's 2% target.
The dollar edged lower, helping gold to rise, as uncertainty about when the Fed might start easing financial conditions gnawed at investors who are trying to gauge whether a slowing economy will enter recession.
Data showed the number of Americans filing new claims for unemployment benefits edged down last week, signaling layoffs remain low even as a strong job market shows signs of cooling.
The market is still running on last week's press conference with Powell that was seen as dovish and the old narrative that bad news is good news, said Matt Miskin, co-chief investment strategist at John Hancock Investment Management in Boston.
"Initial jobless claims were low. It suggests we're not in a recession yet, so as long as that's the case, we're still chopping around in terms of equity prices," he said.
"It's tricky because bad news in terms of the economy eventually is bad news. And when the Fed usually cuts, it's not usually good news for the stock market."
Powell was scheduled to speak at 2 p.m. ET (1900 GMT).
MSCI's gauge of stocks across the globe gained 0.28% as the pan-European STOXX 600 index rose 0.87%.
But on Wall Street, the Dow Jones Industrial Average rose 0%, the S&P 500 gained 0.07% and the Nasdaq Composite added 0.14%.
Treasury yields rose as they unwound moves lower from the previous session. U.S. government bond yields and the dollar tumbled last week when markets saw Powell striking a dovish tone after the Fed's two-day meeting. Softer-than-expected jobs data on Friday adding to a belief that the Fed will stay on hold.
The yield on 10-year notes rose 4.7 basis points (bps) to 4.555% and the two-year's yield, which reflects interest rate expectations, rose 2.5 bps to 4.961%.
Germany's benchmark 10-year borrowing cost rose 3.5 bps (bps) to 2.648%, up from a two-month low of 2.606% on Wednesday.
"I think inflation is yesterday's story," said Pictet Asset Management's Chief Strategist Luca Paolini, explaining the "big question" now was whether there would be a sharp deceleration in the U.S. economy in the coming months.
"We are bullish on bonds," he added. "We think this is the beginning of a long and positive move."
In Asia, Japan's Nikkei raced up 1.5% thanks to solid earnings from Super Mario maker Nintendo and calculator and watch firm Casio and broad-based gains in the oil sector. [.T]
China's property sector woes boomeranged back, though, with the main Hong Kong listed real estate index down 4% as embattled property giant Country Garden plunged nearly 10% on a blow to its rescue hopes. [.SS]
Chinese inflation figures for October also showed a 0.1% decline compared to September and a 0.2% year-on-year fall, pointing to still fragile demand in the world's second biggest economy.
The dollar was flat at 150.97 yen and up slightly against the euro at $1.0713. The dollar index, which tracks the greenback against a basket of currencies of major trading partners, was 0.03% lower at 105.46.
The Brent crude oil benchmark hovered above $80 a barrel on Thursday, with demand concerns and a waning war-risk premium having triggered a selloff over the past week.
U.S. crude rose 1.12% to $76.17 per barrel and Brent was at $80.58, up 1.31% on the day.
"We tend to forget one month ago everyone was panicking about the news coming from the Middle East but look at where the oil price is now," Pictet's Paolini said. "The markets are cynical."
Gold rose as the dollar eased.
Spot gold added 0.7% to $1,962.43 an ounce.
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