Stocks and bonds rose yesterday afternoon after the minutes of the last Federal Reserve interest rate-setting meeting appeared to indicate a relatively neutral stance on future rate rises.
The Fed's decision to hold interest rates steady earlier this month was referred to as "a close call", and the minutes suggested further rate rises might be needed.
But the report also said most committee members thought inflationary pressures would "ease gradually" and the current policy stance could prove to be "consistent with satisfactory economic performance".
Shortly after the release of the minutes, stocks had bounced off their lows for the day on relief that a more hawkish stance had not emerged.
Treasuries, which had fallen in cautious trading before the release of the minutes, also rose, sending yields lower.
"The mixed outlook from the Fed is consistent with the inherent uncertainties between the economy and inflation, and doesn't give much insight into the likelihood of a September move," said analysts at Action Economics.
The debate over the relative significance of inflationary pressures and slowing economic growth resulted in one dissenting voice when the US central bank voted to keep rates on hold this month.
Earlier yesterday, the Conference Board reported that US consumers' confidence tumbled to its lowest level in nine months amid fears over deteriorating business conditions and a weaker jobs market.
The organisation's monthly index dropped from 107 in July to a weaker-than-expected 99.6 in August, which echoed the fall in the University of Michigan's preliminary consumer sentiment index, reported earlier this month. - (Financial Times service)
