In This Article:
* 'We will wait for evidence of actual inflation' - Powell
* Nasdaq logs record close, Taiwan leads small gains in Asia
* Bonds steady after wild swings; dollar retains bid
By Tom Westbrook
SINGAPORE, June 23 (Reuters) - Stocks found a footing and swinging bond markets calmed down on Wednesday, with testimony from U.S. Federal Reserve chair Jerome Powell providing investors with reassurance that the central bank has an eye on inflation but is not hastening to hike rates.
The rates-sensitive Nasdaq index closed at a record high on Tuesday, while tech stocks were bid in Asia - notably in Taiwan where chipmakers helped the benchmark index rise 1%. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4%. Japan's Nikkei rose 0.3%.
The Fed had knocked stocks and boosted the dollar last week with a surprise projection for rate hikes as soon as 2023.
However overnight Powell reiterated the Fed's goal of a broad labour market recovery and said fear of inflation alone would not be enough to prompt rate rises.
"We will wait for evidence of actual inflation or other imbalances," Powell said in a hearing before a U.S. House of Representatives panel.
AMP Capital's chief economist Shane Oliver put it this way in a note to clients on Wednesday: "This is all a long way off as even the first hike is a while away."
Powell's comments helped the yield on benchmark 10-year U.S. Treasuries lower and put the brakes on a rising U.S. dollar. The 10-year Treasury yield fell to 1.4666% on Tuesday and stayed there early in the Asia session.
The U.S. dollar lost a little ground overnight, but it remains near multi-month highs after the Fed's change in tone cleared out a heap of short positions.
The greenback was firm against most majors on Wednesday and last traded 0.1% higher at $1.1928 per euro and was close to its highest for the year at 110.78 yen.
"Dollar bears, surfing a wave of easy Fed policy, are running out of time," Societe Generale analysts said in a note.
"If the U.S. can escape the clutches of the zero-rate bound, it will earn itself a significantly stronger dollar."
SEPTEMBER SHOWDOWN
Several other Fed speakers are due to appear later on Wednesday and their comments may add to a growing sense among traders that September's Fed meeting may bring the announcement of the beginning of the end of stimulus later in the year.
"Short of something going very wrong, taper around the turn of the year seems like a high probability event at this point," said RBC Capital Markets' chief U.S. economist Tom Porcelli.