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Global stocks steady, U.S. Treasury yields rise as recession worries persist

Economy Aug 16, 2022 05:11PM ET
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2/2 © Reuters. FILE PHOTO: Pedestrians wait to cross a road at a junction near a giant display of stock indexes in Shanghai, China August 3, 2022. REUTERS/Aly Song 2/2
 
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By Chibuike Oguh

NEW YORK (Reuters) -Global equity markets were flat while U.S. Treasury yields rose on Tuesday, as recession worries persisted amid concern the Federal Reserve will continue its steep interest rate hikes despite nascent signs of a slowdown in inflation.

The yield curve between two- and 10-year Treasury notes, viewed as an indicator of impending recession, remained inverted at minus 40 basis points on Tuesday.

"It seems that the bond market doesn't quite reflect the inflation happening in the economy," said George Young, a portfolio manager at Villere & Company in New Orleans.

"The weird thing is that in the last couple of weeks bond yields have gone up and stayed up so there's kind of a disconnect. There's kind of a question maybe inflation isn't that bad and we may actually be going into a recession. Market participants are all over the place," he added.

MSCI's gauge of stocks in 50 countries across the globe was up 0.05%. Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.07% lower, while Japan's Nikkei lost 0.01%.

U.S. Treasury yields edged higher as encouraging data from U.S. retail giants suggested the Fed has room to further raise rates to cool inflation. Benchmark 10-year Treasury yields were at 2.8077% from 2.791% on Monday

On Wall Street, the benchmark S&P 500 and the Dow reversed earlier losses and closed higher, with stocks in consumer discretionary, consumer staples, financials and industrials leading the rebound.

The Dow Jones Industrial Average rose 0.71% to 34,152.01, the S&P 500 gained 0.19% to 4,305.2 and the Nasdaq Composite dropped 0.19% to 13,102.55.

Oil prices dropped nearly 3% in volatile trading as recession worries raised uncertainty over global crude demand, even as markets awaited clarity on talks to revive a deal that could allow more Iranian oil exports.

Brent crude futures fell 2.9% to settle at $92.84 a barrel, after hitting a session high of $95.95. West Texas Intermediate crude (WTI) decreased 3.2%, settling at $86.53 a barrel, after rising to $90.65.

The dollar was flat, pulling back from earlier gains, amid expectations the U.S. economy would be stronger than peers in the event of a slowdown in growth.

The dollar index was down 0.009%, with the euro up 0.1% to $1.017.

Safe-haven gold fell for a second straight session on Tuesday as an initially firmer dollar made the greenback-denominated metal more expensive.

Spot gold dropped 0.2% to $1,774.91 an ounce, while U.S. gold futures fell 0.36% to $1,774.90 an ounce.

Global stocks steady, U.S. Treasury yields rise as recession worries persist
 

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Comments (6)
Marco cuevas
Marco cuevas Aug 16, 2022 5:50PM ET
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Fake financial journalism spreaading recession fear again hoping to drop the arket again tomm...thats 3 days in a row market makers havent you had enough?
Tri Stand
Tri Stand Aug 16, 2022 11:23AM ET
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speculation article
Kris Jay
Kris Jay Aug 16, 2022 12:25AM ET
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"yea! Oil drops!  Perfect!  our problems solved.  Drive the stocks up to 2021 highs!!" - Retail Traders "Its dropping because demand is dropping and economy is slowing. slower economy means slower growth and smaller earnings" - Everyone else
King Agamemnon
King_Agamemnon Aug 15, 2022 11:04PM ET
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166061899791414.jpg
If this 88-85 area can hold watch out for another run to the highs in the 4th quarter
The stock Alley
The stock Alley Aug 15, 2022 11:03PM ET
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Another lie . No one is worried aboht a recession that isnt happening . Im convinced bears own this platform.
Kris Jay
Kris Jay Aug 15, 2022 11:03PM ET
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if we dont have a 1970s style recession, we will experience slower growth so compression of 40x-60x multples on EPS's will occur.  At the same time Fed is needing to reverse 5% wage inflation, so has to kill demand there,  Fed needs to increase rates to kill 8.5% inflation to below 2% when 150bps moved it just 0.5%.  Fed is also QT come September.  If you have been trading in the last 10 years then you have only experienced QE, when the fed is providing liquidity in the market and near 0% interest rates.  When QT occurs, Fed will be removing trillions, while raising rates to kill demand (which means slow the economy so there is 4.5-5% unemployment and core inflation is 2%).   They have told everyon ethe plan but many have just said, "no, we're going to rally the market back to where it was before interest rates started the hike.  with a foolish notion that the Fed is ready to pivot to easing in September.   Rates will be hiked every Fed meeting between now and this time next year,
Elvis Durant
Elvis Durant Aug 15, 2022 11:03PM ET
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muahahaha
 
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