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Stocks rebound, bond rout eases

Fed rate odds retreat

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Bloomberg News

U.S. stocks rebounded after the biggest rout since June wiped about $500 billion from the value of equities, the dollar fell and Treasuries erased losses as the Federal Reserve’s Lael Brainard remained dovish in her approach to tighter monetary policy.

Emerging-market assets slumped.

The S&P 500 index jumped the most in two months after sinking 2.5 percent Friday, holding gains after Brainard urged “prudence” in removing accommodation. The dollar fell for the first time in four sessions as the odds for a rate hike next week slid to 22 percent.

Ten-year Treasuries remained little changed, with yields near 1.68 percent. Shares in Europe and Asia, which were closed Friday when the sell-off began, dropped Monday.

Emerging-market equities tumbled 2 percent, while oil rebounded past $46 a barrel.

Brainard counseled continued prudence in tightening monetary policy, even as she said the economy is making gradual progress toward achieving the central bank’s goals. Her comments come after financial markets were jolted last week out of a period of calm by an uptick in concern over the outlook for central bank.

Brainard, a member of the board of governors, is the last speaker before next week’s Fed meeting.

On Friday Boston Fed President Eric Rosengren signaled more willingness to raise interest rates, a day after European Central Bank chief Mario Draghi downplayed the need to add to stimulus.

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