GLOBAL MARKETS-Just don't mention the 'T' word

* Equities lack trend as earnings roll in, bond yields creep up

* Fed expected to stay course but outlook is improving

* Copper comes off decade high

* Apple, Facebook, Ford, Boeing earnings due

* Graphic: Global asset performance

* Graphic: World FX rates


LONDON, April 28 (Reuters) – World shares cosied up close to record highs and the dollar and global bond yields nudged up on Wednesday, as traders waited to see if the U.S. Federal Reserve utters the dreaded ‘T’ word later – tapering of its mass stimulus programme.

The broad expectation is that it won’t want to unsettle markets for now, and with a packed day of corporate earnings, economic data and U.S. President Joe Biden’s first address before a joint Congress session, there was plenty to navigate.

MSCI’s broadest index of world shares was sidestepping towards its best month of the year so far, with Europe’s bourses fighting for modest gains and S&P 500 futures flat after Wall Street’s more than 5% April spurt.

In the FX markets, the dollar was on course for its first unbroken two-day run of gains of the month – April is currently set to be its cruellest month since last July. U.S. 10-year Treasury yields, whose swift rise earlier in the year caught markets off guard, touched their highest in nearly two weeks at 1.647%.

“The thing that we are going to watch most closely is if the Fed says anything along the lines of tapering of asset purchases,” said Jim Caron, a senior portfolio manager at Morgan Stanley Investment Management.

“As long that doesn’t get mentioned, we are all good,” he said, explaining that with the coronavirus pandemic still worsening in many parts of the world, investors would view any move towards tapering as premature.

Most Fed watchers expect Chairman Jerome Powell to repeat the bank’s recent message that its low interest rates and support programmes will remain in place for a long time yet.

Biden will also address Congress and is likely to underscore his administration’s plans for mass infrastructure and stimulus spending.

These developments would normally be positive for stocks, but analysts say so much economic optimism is already priced into the equity market that it is difficult to budge stocks further from current levels.

Otherwise, Europe’s traders were waiting to hear from ECB President Christine Lagarde and other top policymakers. Economic data releases showed an unexpected drop in Germany’s GfK consumer confidence reading for May though an equivalent in France at least stayed steady for April.


U.S. earnings later include tech and internet giants Apple, Facebook and Qualcomm, as well as Boeing, GlaxoSmithKline and Ford. The preliminary March reading for U.S wholesale inventories is also due.

There had been mixed bag of earnings from Tesla, 3M , Microsoft, and Google-parent Alphabet on Tuesday.

In the FX markets, the dollar index rose 0.2% at 91.047 , bouncing from Monday’s low of 90.679, its weakest level since March 3.

The greenback edged up slightly against the yen and the British pound, but trading is expected to be subdued until Powell speaks after the Fed meeting.

Pound followers are also watching next week’s UK regional elections, especially in Scotland where the pro-independence SNP and Green parties look on course to take firm control Scotland’s Holyrood parliament.

“With the pro-independence parties likely to secure a majority in the May 6 Holyrood election, we see a 15% chance of independence,” investment bank Morgan Stanley said in a research note to clients, adding there was a 30% chance that a new referendum would be held.

As well as the rise in Treasury yields helping the dollar higher, break-even rates on 10-year Treasury Inflation-Protected Securities, a measure of expected annual inflation for the coming decade, rose to 2.41%, the highest since 2013.

Elsewhere, the Australian dollar was knocked lower after disappointing data on consumer prices and in the cryptocurrency market there was excitement as the European Investment Bank said it would sell a two-year digital bond worth 100 million euros ($120 million) on the ethereum blockchain network.

Rival cryptocurrency Bitcoin edged lower to $55,618.

In commodities, Brent crude futures fell a touch to $66.40 a barrel, while U.S. West Texas Intermediate crude lost 0.03% to $62.92 per barrel due to worries about energy demand.

Benchmark copper edged back from a decade high of $9,965 a tonne hit on Tuesday due to some concerns about a possible softening of demand in China, the world’s top consumer of the metal. ($1 = 0.8278 euros)

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