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The forecasts seem at odds as higher rates raise the credit costs that can crimp the economy. MSCI's U.S.-centric gauge of global equity performance and stocks on Wall Street bounced back while Treasury yields, which move inversely to price, retreated. Yields on two- and 10-year notes remained inverted at -68.3 basis points as the shorter-dated note yields more than the longer one. MSCI's all-world country index for stocks (.MIWD00000PUS) gained 0.14%, but the pan-European STOXX 600 index (.STOXX) closed down 0.31%. Oil prices rose as renewed global supply concerns from Russia's fuel export ban countered demand fears driven by macroeconomic headwinds and higher interest rates.

Persons: Brendan McDermid, Marvin Loh, Joe LaVorgna, SMBC, Brent, Craig Ebert, Huw Jones, Tom Westbrook, Marguerita Choy, Rashmi Aich, Aurora Ellis Organizations: New York Stock Exchange, REUTERS, Bank, Japan, Treasury, Federal, Fed, U.S, SMBC Nikko Securities America, Dow Jones, Nasdaq, Bank of, Japan's Nikkei, Investors, Bank of England, Swiss, Swiss National Bank, JPMorgan, Thomson Locations: New York City, U.S, Boston, New York, Asia, Japan, China, Sweden, Norway, BNZ, Wellington

Yet higher rates typically crimp bank loans and raise the cost of credit. MSCI's U.S.-centric gauge of global equity performance and stocks on Wall Street bounced back while the dollar and Treasury yields, which move inversely to price, retreated. The initial reassessment of the Fed's higher-for-longer policy drove the rise in Treasury yields and created headwinds for risk assets, including equities, credit and emerging markets, but supported the dollar. MSCI's all-world country index for stocks (.MIWD00000PUS) gained 0.37%, but the pan-European STOXX 600 index (.STOXX) fell 0.39%. In emerging markets, Indian bonds and the rupee rallied after JPMorgan said it would add Indian debt to its widely tracked emerging markets index, setting the stage for billions of dollars in foreign inflows.

Persons: Brendan McDermid, Marvin Loh, Brent, Craig Ebert, Huw Jones, Tom Westbrook, Marguerita Choy, Rashmi Organizations: New York Stock Exchange, REUTERS, Bank, Japan, U.S, Treasury, Dow Jones, Nasdaq, Bank of, Japan's Nikkei, Investors, Bank of England, Swiss, Swiss National Bank, JPMorgan, Thomson Locations: New York City, U.S, U.S . Federal, Boston, Asia, Japan, China, Sweden, Norway, BNZ, Wellington

☆ Stocks waver, short-end U.S. yields rise after hawkish Fed statement
▼ + stars: | 2023-09-20 | by ( Herbert Lash | ) www.reuters.com time to read: +5 min

"They're talking about higher rates for longer, but it's really the economy that matters. MSCI's U.S.-centric gauge of stocks across the globe (.MIWD00000PUS) fell 0.25% as stocks on Wall Street mostly slid. "Right now the message is we're going to leave rates higher for longer to make sure we slay the inflation dragon. Sterling came under pressure after data showed Britain's high inflation rate fell unexpectedly in August, prompting speculation that the Bank of England could pause its historic run of interest rate hikes as soon as Thursday. The dollar index rose 0.076%, with the euro down 0.02% to $1.0675.

Persons: Brendan McDermid, Jerome Powell, Powell, Gennadiy Goldberg, it's, Anthony Saglimbene, Sterling, Brent, Herbert Lash, Dhara Ranasinghe, Samuel Indyk, Tom Westbrook, Toby Chopra, Chizu Nomiyama, Sharon Singleton, Aurora Ellis Organizations: New York Stock Exchange, REUTERS, Global, Federal Reserve, Market, Fed, TD Securities, Dow Jones, Nasdaq, Japan's Nikkei, Bank of England, Bank of, U.S, West Texas, Thomson Locations: New York City, U.S, New York, MSCI's U.S, Troy , Michigan, Europe, Asia, Pacific, Japan, Sweden, Switzerland, Norway, Britain, London, Singapore

☆ Global shares slip, dollar soars vs yen on BoJ policy expectations
▼ + stars: | 2023-07-21 | by ( Herbert Lash | ) www.reuters.com time to read: +5 min

[1/3] Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 19, 2023. The yen weakened 1.19% to 141.77 per dollar, while the dollar index , a measure of the greenback against major trading currencies, rose 0.31%. "None of them are happening with massive severity, but the longer we go on with higher rates, more and more that's going to come through," he said. BOJ policymakers prefer to scrutinize more data to ensure wages and inflation keep rising before changing yield control policy, five sources familiar with the matter said. "Markets were building up expectations which now look unlikely to play out," said Guillaume Paillat, a multi-asset manager at Aviva Investors.

Persons: Brendan McDermid, BoJ, Dow, Garrett Melson, Mullarkey, Patrick Spencer, Guillaume Paillat, Brent, Herbert Lash, Naomi Rovnick, Stella Qiu, Conor Humphries, David Holmes, Marguerita Choy, Cynthia Osterman Organizations: New York Stock Exchange, REUTERS, Fed, ECB, Reuters, Bank of Japan, U.S . Federal Reserve, European Central Bank, Nasdaq, Investment, Microsoft Corp, Apple Inc, SLC Management, Baird, Microsoft, Apple, NYSE, Aviva Investors, Treasury, Thomson Locations: New York City, U.S, Boston, London, MSCI's U.S, Europe, China, Sydney

Gold prices slipped as the dollar rebounded to its highest level in more than a week as investors prepare for next week's big central bank policy meetings, including the BoJ, the U.S. Federal Reserve and the European Central Bank. The yen weakened 1.13% to 141.68 per dollar, while the dollar index , a measure of the greenback against major trading currencies, rose 0.36%. BoJ policymakers prefer to scrutinize more data to ensure wages and inflation keep rising before changing yield control policy, five sources familiar with the matter said. The report added there was no consensus within the central bank and the decision could still be a close call. As Japanese inflation has stayed above the BoJ's target, traders have bet on the central bank ditching its yield curve control program, a move likely to cause the yen to strengthen.

Persons: Brendan McDermid, BoJ, Garrett Melson, Patrick Spencer, Spencer, you've, Guillaume Paillat, Brent, Herbert Lash, Naomi Rovnick, Stella Qiu, Conor Humphries, David Holmes, Marguerita Choy Organizations: New York Stock Exchange, REUTERS, Fed, ECB, Reuters, Bank of Japan, U.S . Federal Reserve, European Central Bank, Investment, Nasdaq, Baird, Microsoft Corp, Apple Inc, NYSE, Aviva Investors, Treasury, Thomson Locations: New York City, U.S, Boston, Europe, China, London

☆ Stocks rise as U.S. inflation trends lower, bond yields slide
▼ + stars: | 2023-05-10 | by ( Herbert Lash | ) www.reuters.com time to read: +5 min

The odds of the Fed cutting rates later this year also increased. Consumer prices decelerated to 4.9% year-on-year, the 10th straight month of slowdown as prices react to the Fed's rate-tightening cycle. The two-year Treasury yield, which typically moves in step with rate expectations, slid from 4.05% before the CPI news and dropped to 3.908%. The dollar index eased 0.20% and equity markets rose as the CPI data suggested the Fed's most aggressive rate hikes in four decades were yielding results. U.S. crude futures fell 1.6% to settle at $72.56 a barrel, and Brent settled down 1.3% at $76.41 a barrel.

The likelihood the Fed cuts rates later this year also increased. "The Fed does not aim get rate policy right just in time, they aim to get it right over time." Consumer prices decelerated to 4.9% year-on-year, the 10th straight month of slowdown as prices react to the Fed's rate-tightening cycle. The two-year Treasury yield, which typically moves in step with rate expectations, slid from 4.05% before the CPI news and dropped to 3.904%. Gold prices slipped as the CPI data was viewed as mixed and triggered profit-taking by some investors.

[1/2] The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, February 8, 2023. Crude prices eased, with gold firmer as the dollar index fell 0.18%, while MSCI's U.S.-centric index of stock performance in 47 countries (.MIWD00000PUS) shed 0.44%. China's blue chips (.CSI300) rose 1.3%, pulling away from a one-month trough, while Hong Kong's Hang Seng Index (.HSI) gained 1.6%. Crude prices eased as oil infrastructure appeared to have escaped serious damage from the earthquake that devastated parts of Turkey and Syria, while U.S. inventories swelled and investors worried about central bank rate hikes. Gold prices rose for a fourth straight session as the dollar faltered, even as Fed officials indicated more rate hikes are warranted to rein in inflation.

☆ Stocks, euro gain as Fed, ECB rate hike outlooks diverge
▼ + stars: | 2023-01-23 | by ( Herbert Lash | ) www.reuters.com time to read: +5 min

[1/3] A new 100-euro banknote is presented at the ECB headquarters in Frankfurt, Germany, September 17, 2018. In Europe, technology firms also spearheaded gains as optimism about Europe likely avoiding a steep recession overshadowed recent hawkish remarks from ECB officials. Investors are waiting for euro zone and U.S. flash PMI data on Tuesday, which are expected to show less severe economic contractions than the previous month, according to analysts polled by Reuters. The difference in expectations for Fed and ECB policy led the euro to hit $1.0927 as it climbs from a two-decade low of $0.953 set in September. Euro zone bonds were little changed, with the benchmark 10-year German yield at 2.209% .

"Today's data shows that inflation is coming down, but it's lingering and is stickier than most assume," he said. Treasury yields rose, suggesting higher rates ahead for the long term, with the benchmarket 10-year yield up 10.2 basis points to 3.595%. The two-year note , which often moves in step with rate expectations, rose 3.2 basis points to 4.344%. Oil prices rose but both benchmarks were set for a weekly loss as worries over a weak economic outlook in China, Europe and the United States weighed on oil demand. Gold prices rose despite an uptick in the dollar and Treasury yields as some investors still expect the Fed will slow the pace of rate hikes from early next year.

☆ Treasury yields jump before Fed meeting, dollar gains
▼ + stars: | 2022-09-19 | by ( Herbert Lash | ) www.reuters.com time to read: +6 min

The higher yield helped strengthen the dollar and made gold less attractive as concerns about the economy in light of higher rates cooled risk taking. After the past three Fed meetings, there have been relief rallies in bonds and equities as markets interpreted Powell as being dovish. read moreThe two-year yield , a barometer of future inflation expectations, climbed to a fresh almost 15-year high of 3.970%. read moreThe dollar rose 0.21% against the yen , backing off from the 24-year peak of 144.99 two weeks ago amid increasingly strident intervention warnings from Japanese policymakers. The dollar index rose 0.055%, with the euro up 0.06% to $1.0021.

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