Stocks falter, US yields fall as investors digest Fed minutes

Stocks falter, US yields fall as investors digest Fed minutes

A man wearing a protective mask walks past an electronic board displaying the Shanghai Composite Index, the Nikkei Index and the Dow Jones Industrial Average in front of a brokerage firm in Tokyo, Japan amid the outbreak of the coronavirus disease (COVID-19) on March 7, 2022. Portal/ Kim Kyung Hoon

  • Wall Street indices are trading lower
  • Yield curve remains inverted
  • Dollar firmer, oil prices up 2%
  • Benchmark 10-year yields fall
  • Safe-haven gold reverses profits

NEW YORK, Aug 18 (Portal) – Global stock markets were choppy and US Treasury yields fell on Thursday as uncertainty over the pace of rate hikes reigned among investors after Federal Reserve meeting minutes showed the Officials were determined to contain the rising prices.

Markets remained bearish amid concerns over a looming recession, although Fed officials indicated in minutes of their July meeting released on Wednesday that they would adopt a less aggressive stance as inflation begins to ease.

“Markets are still trying to understand Fed protocol,” which is causing volatility, said Charles Self, chief investment officer at Tandem Wealth Advisors in Appleton, Wisconsin.

“The protocols were uniformly hawkish from our point of view,” Self added. “Clearly among all voting members, tackling inflation is the number one choice and they will do whatever it takes to raise rates to get there. We believe they are using the labor market as a cover.”

MSCI’s stock index covering stocks in 50 countries around the world (.MIWD00000PUS) lost 0.23%. However, the pan-European STOXX 600 index (.STOXX) edged up 0.39%.

US Treasury yields fell slightly as investors continued to digest Fed meeting minutes. Benchmark 10-year bonds fell to 2.8713% from 2.895% on Wednesday. Two-year notes fell from 3.295% to 3.2246%.

The yield curve between the 2-year and 10-year Treasury bills, widely viewed as an indicator of an impending recession, remained inverted at minus 38 basis points on Thursday.

“Since the Fed’s July 27 meeting, two-year yields are up 43 basis points, meaning the bond market expects them to hike rates higher for an extended period, while the stock market is up 5%. , which means the market expects them to hike rates relatively quickly and maybe even cut them next year,” Self added.

“Well, I think the bond market is usually right.”

IMPORTANT INDICES

On Wall Street, all major indices traded lower on a sell-off in stocks in the healthcare, financials, consumer discretionary and staples sectors.

The Dow Jones Industrial Average (.DJI) was down 0.33% to 33,867.17, the S&P 500 (.SPX) was down 0.11% to 4,269.42 and the Nasdaq Composite (.IXIC) was down 0.05% to 12,931.39.

Oil prices rose about 2% as solid US fuel consumption data and an expected contraction in Russian supply later in the year offset fears that slowing economic growth could sap demand.

Brent futures were up 2.26% to $95.77 a barrel, while US West Texas Intermediate (WTI) crude was up 2.04% to $89.91.

The US dollar index hit a three-week high as investors reassessed Wednesday’s Fed minutes as more hawkish than originally interpreted and after data showed solid US economic momentum. Continue reading

The dollar index rose 0.647%, while the euro fell 0.78% to $1.0101.

Gold reversed earlier gains and traded lower on a firmer dollar as investors looked for more economic clues that could influence rate hikes. Spot gold fell 0.2% to $1,757.68 an ounce, while US gold futures were up 0.15% to $1,762.90 an ounce.

Reporting by Chibuike Oguh in New York; Editing by Susan Fenton and David Holmes

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