Stocks choppy, US yields fall as investors digest Fed minutes

Stocks choppy, US yields fall as investors digest Fed minutes

A man in a protective mask walks past an electronic board displaying the Shanghai Composite Index, Nikkei Index, and Dow Jones Industrial Average during the coronavirus disease (COVID-19) outbreak outside a real estate agency in Tokyo, Japan, March 7, 2022. REUTERS / Kim Kyung Hoon

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  • Wall Street indices fall
  • Yield curve remains inverted
  • Dollar firmer, oil price rises 2%
  • Benchmark 10-year yield falls
  • Safe-haven gold reverses profits

NEW YORK, Aug. 18 (Reuters) – Global stock markets were shaky and US Treasury yields fell Thursday as uncertainty loomed over the pace of interest rate hikes among investors after Federal Reserve meeting minutes showed officials were determined to keep rising. curb prices.

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

“The markets are still trying to figure out the Fed minutes,” which is fueling volatility, said Charles Self, chief investment officer at Tandem Wealth Advisors in Appleton, Wisconsin.

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“The minutes were uniformly hawkish in our view,” Self added. “Clearly, among all voting members, curing inflation is the number 1 choice and they will do whatever it takes to raise rates to get there. We think they’re using the job market as a cover.”

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

US Treasury yields fell as investors continued to digest the minutes of the Fed meeting. 10-year benchmark bonds fell to 2.8713%, from 2.895% on Wednesday. Two-year bonds retreated to 3.2246%, from 3.295%.

The yield curve between two- and 10-year government bonds, widely regarded 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 thinks they will raise interest rates for an extended period of time, while the stock market is up 5%. that they will raise rates relatively quickly and maybe even lower them next year,” Self added.

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

IMPORTANT INDEXES

On Wall Street, all major indices were lower as a result of a sell-off in healthcare, financials, consumer discretionary and consumer staples sectors.

The Dow Jones Industrial Average (.DJI) fell 0.33% to 33,867.17, the S&P 500 (.SPX) lost 0.11% to 4,269.42 and the Nasdaq Composite (.IXIC) fell 0.05% to 12,931 ,39.

Oil prices rose about 2% as robust data on US fuel consumption and a projected decline in Russian supply later in the year offset concerns that slowing economic growth could undermine demand.

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

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

The dollar index rose 0.647%, while the euro fell 0.78% to $1,0101.

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

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

Our Standards: The Thomson Reuters Trust Principles.

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