by On Tuesday, global equity markets were holding steady, while there was a rise recorded in US Treasury yields, as recession worries continued amidst concerns about the US Federal Reserve’s policy.
It is expected that despite some nascent indications of a slowdown in inflation, the US Fed is likely to continue its aggressive hike in the interest rates.
Bond market movements
On Tuesday, the yield curve between the 2-year and 10-year US Treasury bonds remained inverted and was at around 40 basis points.
This curve is often considered an indicator of an impending economic recession. Market analysts said that it appeared the bond market was not reflecting the inflation that continues to persist in the economy.
They added that the strange thing was that bond yields had risen in the last couple of weeks and they had remained high, which resulted in a disconnect.
Analysts said that this was an indicator of inflation not being so bad and the economy actually entering a recession. This has seen market participants seem all over the place.
US retail giants posted encouraging data, which suggested that the US Fed may have more room for hiking rates in order to cool inflation.
This pushed up US Treasury yields, as they went from 2.791% on Monday to 2.8077% on Tuesday.
Index performances
There was a 0.05% increase in the MSCI’s gauge of world stocks that comprises of 50 countries. Overnight trading saw the MSCI’s Asia-Pacific index excluding Japan lower by 0.07%.
A 0.01% loss was recorded in the Nikkei 225 index in Japan. After recording losses earlier on Wall Street, the Dow and S&P 500 indexes reversed and ended the day higher.
The rebound was led by stocks in consumer staples, consumer discretionary, industrials and financials. A 0.71% increase in the Dow Jones Industrial Average saw it reach 34,152.01.
A 0.19% gain in the S&P 500 also saw it hit 4,305.2, while a 0.19% drop was recorded in the Nasdaq Composite to reach 13,102.55.
Other assets
There was an almost 3% drop in oil prices in a volatile trading session, as recession fears increased uncertainty about the global demand for crude.
Meanwhile, markets were waiting for some clarity on talks of reviving a deal that could lead to more exports of Iranian oil.
A 2.9% drop was recorded in Brent crude futures, which saw them come down to $92.84 per barrel, after they had reached a session high of $95.95.
A 3.2% decrease was also recorded in West Texas Intermediate crude (WTI), which saw it come down to $86.53 per barrel, after it had risen to $90.65.
As for the US dollar, it remained flat for the day, after reversing earlier gains because of expectations that if a slowdown in growth was to happen, the US economy would fare much better than its peers.
There was a 0.009% drop in the dollar index, while a 0.1% rise was recorded in the euro, which saw it reach $1.017. There was also a decline in safe-haven gold for the second consecutive session.
