Stocks choppy, US yields fall as investors digest Fed minutes

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NEW YORK – Global stock markets were choppy and U.S. Treasury yields fell on Thursday as uncertainty about the pace of interest rate hikes prevailed among investors after the minutes of the meeting of the Federal Reserve showed officials are determined to rein in rising prices.

Markets have been volatile amid worries about a looming recession, even though Fed officials said in July meeting minutes released Wednesday that they would take a less aggressive stance if inflation starts to step back.

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

“The minutes were uniformly hawkish in our view,” Self added. “It’s clear that among all voting members, fighting inflation is the No. 1 choice and they’re going to do whatever it takes to raise rates to make it happen. We think they are using the job market as a cover.

The MSCI gauge of stocks in 50 countries around the world rebounded from earlier losses and rose 0.05%. The pan-European STOXX 600 index closed up 0.39%.

US Treasury yields fell slightly as investors continued to digest the Fed meeting minutes. A series of Fed officials, including St. Louis Fed President James Bullard and San Francisco Fed President Mary Daly, reiterated on Thursday that the U.S. central bank must continue raising interest rates. interest in containing inflation. Benchmark 10-year bonds were down to 2.8859% from 2.895% on Wednesday. Two-year notes fell to 3.2057% from 3.295%.

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The yield curve between two- and 10-year Treasuries, widely seen as an indicator of an impending recession, remained inverted at minus 38 basis points on Thursday.

“Since the July 27 Fed meeting, two-year yields have risen 43 basis points, which means the bond market thinks it will hike rates higher for a longer period, while the stock market is up 5%, which means the market thinks it will raise rates fairly quickly and maybe even cut rates next year,” Self added.

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

MAJOR INDICES

On Wall Street, major indexes reversed early-session losses and ended higher, thanks in part to upbeat sales forecasts from networking giant Cisco Systems that helped boost the tech sector. Stocks in the industrials and energy sectors were also among the main gainers.

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The Dow Jones Industrial Average rose 0.06% to 33,999.04, the S&P 500 gained 0.23% to 4,283.74 and the Nasdaq Composite added 0.21% to 12,965.34.

Oil prices rose nearly 3% as strong US fuel consumption data and an expected drop in Russian supply later in the year offset fears that slowing economic growth does not undermine demand.

Brent crude futures rose 3.09% to $96.59 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 2.7% to $90.50.

The US dollar index hit a one-month high after comments from Fed officials reaffirming the need for further rate hikes.

The dollar index rose 0.797%, with the euro up 0.01% at $1.0089.

Gold reversed earlier gains and was lower on a stronger dollar as investors looked for more economic clues that could influence rate hikes. Spot gold fell 0.2% to $1,758.20 an ounce, while US gold futures fell 0.28% to $1,755.40 an ounce. (Reporting by Chibuike Oguh in New York; Editing by David Holmes and Matthew Lewis)

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Robert D. Coleman