Reuters - Stock prices held near record highs Wednesday while U.S. bond yields were near their lowest in a month as market participants bet the Federal Reserve is some way off from tapering its economic stimulus.
MSCI's all-country world index last stood at 716.64 points after scaling an intraday high of 718.19 points Tuesday - led by gains in Europe indexes.
In Asia, the MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.15% and Japan's Nikkei average fell 0.25%.
On Wall Street Tuesday the S&P 500 was steady and near its record high as market participants looked to Thursday's inflation data.
The 10-year U.S. debt yield, on the other hand, fell to 1.513%, its lowest in a month, and down a quarter of a percentage point from a 14-month peak of 1.776% hit in March. It last stood at 1.533% - almost flat so far Wednesday.
"As the recovery in the job market is contained, any discussion at the Federal Reserve on tapering is unlikely to gain momentum, even if it starts soon," senior rates strategist at Nomura Securities Naokazu Koshimizu said.
"So those who had bet on steepening of the yield curve are unwinding their positions while some market participants are also now buying to earn carry."
U.S. payrolls data Friday showed job hiring didn't grow as fast as economists had expected despite growing signs of a labor shortage.
Many analysts think more evidence of strong jobs growth would be required for the Federal Reserve to step up its discussion on tapering.
The U.S. central bank has said rises in inflation this quarter would be short-lived and would not threaten price stability, one of its main mandates.
Thursday's U.S. consumer price data is expected to show the overall annual inflation rate rose to 4.7% and core inflation increased to 3.4%.
While those readings will be well above the Federal Reserve's inflation target of 2%, many economists expect the inflation rate to ease in coming months, allowing the Federal Reserve to wait before taking any tapering measures.
Yet some market participants remained wary that a tight labor market could lead to unexpectedly strong inflationary pressures.
"The U.S. labor market looks really tight. At the moment, workers are not coming back for various reasons. But they will eventually return and as payrolls grow, companies will have to raise wages," said Yoshinori Shigemi, macro strategist at Fidelity International.
Major currencies were steady. The euro stood flat at $1.2173, while the dollar fetched 109.50 yen.
Investors have scaled back expectations that the European Central Bank may indicate a plan to reduce its asset purchases when it reviews policy Thursday.
Oil prices held firm after U.S. Secretary of State Antony Blinken said that even if the U.S. were to reach a nuclear deal with Iran, hundreds of U.S. sanctions on Tehran would remain in place.
U.S. crude futures closed above $70 per barrel for the first time since October 2018 Tuesday and last stood at $70.21, up 0.2%. Brent futures rose 0.2% to $72.35, staying near their highest level since early 2020.