Treasuries dropped, erasing earlier gains, while gold fell and U.S. stocks pared their advance as Federal Reserve Chairman Ben S. Bernanke said the central bank may reduce asset purchases in the next few meetings.
Ten-year Treasury yields climbed five basis points to 1.97 percent as of 10:54 a.m. in New York and the Dollar Index rose 0.2 percent. The Standard & Poor’s 500 Index was up 0.3 percent after climbing as much as 1.1 percent. The Stoxx Europe 600 Index was little changed, reversing a 0.7 percent earlier drop. Silver lost 0.4 percent and gold retreated 0.6 percent, after each added more than 2.5 percent earlier.
U.S. stocks extended gains earlier while gold and Treasuries rallied as Bernanke said in prepared remarks to Congress that a premature withdrawal of stimulus would put the economic recovery at risk. Bernanke later told lawmakers that the Fed is still continuing to assess whether there will be significant improvement in the job market and he’s not sure if a reduction in purchases will begin before the Labor Day holiday in September.
U.S. policy makers will know in three to four months whether the economy is healthy enough to overcome federal budget cut and allow the central bank to begin reducing record stimulus, Fed Bank of New York President William C. Dudley said in an interview with Michael McKee airing today on Bloomberg Television.
