The Nasdaq led the decline on Wall Street, with higher rates seen as a negative for growth stocks
Stocks on global indexes were lower on Tuesday while U.S. Treasury yields rose to multi-year highs as comments from U.S. Federal Reserve Governor Lael Brainard put investor focus on the possibility of aggressive monetary policy tightening.
Yields took off after Brainard said she expects rapid reductions to the Fed’s balance sheet alongside methodical increases to the benchmark rate.
Wednesday brings the release of minutes from the Fed’s last policy meeting. The ECB will publish its equivalent minutes on Thursday.
The yield on 10-year Treasury notes was up 12.9 basis points to 2.541% while the 2-year note yield was up 9.2 basis points at 2.520%, leaving the 2-10 curve at 2 basis points after having been inverted for the most part since last week.
The Nasdaq led the decline on Wall Street, with higher rates seen as a negative for growth stocks.
The market right now is focused on the Fed’s intentions for its balance sheet, which has led to the yield curve reversing some of the inversions that we saw last week, said Jim Barnes, director of fixed income at Bryn Mawr Trust.
The Dow Jones Industrial Average dropped 63.38 points, or 0.18%, to 34,858.5, the S&P 500 shed 27.8 points, or 0.61%, to 4,554.84 and the Nasdaq Composite declined 245.08 points, or 1.69%, to 14,287.48.
The pan-European STOXX 600 index was flat and MSCI’s gauge of stocks across the globe shed 0.59%.
The Australian dollar gained, boosted by the prospect of policy tightening by the Reserve Bank of Australia, while the euro fell on French election worries and the likelihood of more sanctions on Russia over Ukraine.
The Aussie dollar gained about 1% to US$0.7621, while the New Zealand dollar gained 0.6% to US$0.6996.
The dollar index rose 0.3%, with the euro down 0.46% to $1.092.
