Stocks fall with dollar as investors assess data, Trump tariff pledge
Japan's yen strengthens to almost five-week high vs dollar
US PCE data roughly in line with expectations
Oil choppy after Israel-Hezbollah ceasefire, before OPEC+ meet
Updates to late U.S. morning
By Sinéad Carew and Medha Singh
Nov 27 (Reuters) -MSCI's global equities index edged lower and the dollar slipped on Wednesday as investors digested the latest economic data and the potential impact of policies from the incoming U.S. administration, including threats of new tariffs.
U.S. Treasury yields pared some declines in choppy trading after data showed U.S. consumer spending increased solidly in October, suggesting the economy kept a strong growth pace last month but that progress dampening inflation has stalled.
Oil prices flitted between red and green after a ceasefire deal between Israel and Hezbollah in Lebanon while also anticipating Sunday's OPEC+ meeting, which may delay a planned increase in oil output.
Equities lost some ground as investors read through the data, which showed that in the 12 months through October core inflation, which the U.S. central bank tracks for monetary policy, increased 2.8% after climbing 2.7% in September.
"This was no earth-shattering news for the markets. We all expected that inflation would pop up a little bit, but inflation is not getting out of hand. And that's the key.” said Peter Cardillo, chief market economist at Spartan Capital Securities. "This paves the way for a 25 basis point cut in December and then probably a pause."
Traders are betting on a 70% probability for a Federal Reserve rate cut in December compared with a 59% probability on Tuesday, according to CME Group's FedWatch tool.
On Wall Street at 11:37 a.m. (1637 GMT), the Dow Jones Industrial Average .DJI was up 7.90 points, or 0.02%, to 44,868.21, the S&P 500 .SPX was down 20.96 points, or 0.35%, to 6,000.67, and the Nasdaq Composite .IXIC was down 170.34 points, or 0.89%, to 19,005.23.
MSCI's gauge of stocks across the globe .MIWD00000PUS was down 0.48 points, or 0.06%, to 858.60, while Europe's STOXX 600 .STOXX index was down 0.2%.
Cardillo expects a pause in rate cuts after December on uncertainty about Trump's tariff threats.
Trump said late on Monday that he would immediately put a 25% tariff on all products from Mexico and Canada when he takes office in January, and impose an additional 10% tariff on goods from China. The threat drew warnings of retaliation.
The incoming president also chose trade lawyer Jamieson Greer as his new U.S. trade representative, a veteran of his first-term trade war against China.
Alex Atanasiu, portfolio manager at Glenmede Investment Management, pointed to preparation for Trump's return to the White House as a factor behind Wednesday's trading since small cap and cyclical stocks were up "at the expense of megacap tech."
And such moves were likely magnified due to lower liquidity as investors turn their focus to the U.S. Thanksgiving holiday on Thursday, according to Atanasiu. Thursday's market close will be followed by a shorter trading day on Friday.
In Treasuries, the yield on benchmark U.S. 10-year notes US10YT=RR fell 6 basis points to 4.242%, from 4.302% late on Tuesday while the 30-year bond US30YT=RR yield fell 5.8 basis points to 4.4223%.
The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations, fell 4.1 basis points to 4.213%, from 4.254% late on Tuesday.
In currencies, the dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, was down 0.8% to 105.98.
Against the Japanese yen JPY=, the dollar weakened 1.46% to 150.86, putting the yen at its strongest level versus the greenback in almost five weeks.
The euro EUR= was up 0.82% at $1.0572, while sterling GBP= strengthened 0.88% to $1.2678.
The largest cryptocurrency, bitcoin BTC=, attempted to find its feet after a four-day retreat from a record high of $99,830. It was last up 5.13% at $96,356.00.
Oil prices had settled lower on Tuesday following confirmation of the Israel-Hezbollah ceasefire after selling off more sharply on Monday in anticipation of an agreement.
On Wednesday, U.S. crude CLc1 was down 0.07% at $68.72 a barrel, while Brent LCOc1 was down to $72.73 per barrel, 0.11% lower on the day.
Gold XAU= rose 0.38% to $2,641.87 an ounce. U.S. gold futures GCc1 rose 0.76% to $2,641.30 an ounce.
World FX rates YTD http://tmsnrt.rs/2egbfVh
Asian stock markets https://tmsnrt.rs/2zpUAr4
Reporting by Sinéad Carew, Medha Singh and Kevin Buckland; Additional reporting by Tom Westbrook; Editing by Kim Coghill, Timothy Heritage and Mark Potter
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