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Three major Wall Street indexes trade lower
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Benchmark 10-year yields reach hit new high
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European shares fall
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Oil prices slip
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U.S. dollar flat, safe-haven gold drops
(New throughout, updates with U.S. markets)
By Chibuike Oguh
NEW YORK, Feb 21 (Reuters) - Global equity markets fell
while U.S. Treasury yields hit new highs on Tuesday as investors
weighed the prospects of a longer-than-anticipated stiff
monetary policy stance by the Federal Reserve following
continued strong economic data.
Market sentiments have remained bearish after Fed officials
signaled last week that the U.S. central bank was likely to keep
raising interest rates for longer than was previously forecast
in its bid to tame inflation.
The Fed will release the minutes of its last meeting on
Wednesday, which will give traders a glimpse of how high
officials are projecting interest rates would go after recent
data showed stronger-than-expected U.S. employment and consumer
prices.
Benchmark 10-year note yields jumped to the
highest since Nov. 10 before retreating to 3.9272%. The yield
curve between two-year and 10-year notes remained
deeply inverted at minus 78 basis points, indicating heightened
concerns over an impending recession.
"The Fed has a conundrum because as long as people are
working, they spend money on specific things that's rotating
like travel, home improvement, etc.," said Tom Plumb, portfolio
manager at Plumb Balanced Fund in Madison, Wisconsin.
"Anytime the market tries to convince itself that tapering
or the Fed will take its foot of the brakes sometime soon, they
get slapped with reality that it's probably not going to happen
for the next six months or so," Plumb added.
The MSCI world equity index , which tracks
shares in 50 countries, was down 1.2%. European stocks fell as much as 1% before clawing back some of its losses, and
was last down 0.16%.
On Wall Street, all three major indexes were trading lower
led by a selloff in technology, consumer discretionary,
industrials and financial stocks. The Dow Jones Industrial
Average fell 1.53% to 33,308.97, the S&P 500 lost
1.55% to 4,015.9 and the Nasdaq Composite dropped 1.9%
to 11,562.98.
Oil prices slipped in a volatile session as persistent
concerns about global economic growth outweighed supply curbs
and prompted investors to take profits on the previous day's
gains.
Brent crude was down 1.06% at $83.18 per barrel,
while the U.S. West Texas Intermediate crude (WTI) for
March, which expires on Tuesday, fell 0.01% to $76.33 per
barrel.
The U.S. dollar was flat against most major currencies as
data continued to point to the resilience of the U.S. economy
despite the Fed's monetary policy actions. The dollar index was trading up at 0.077%. The euro down 0.14% to
$1.0667, as it came under pressure after data showed euro zone
manufacturing activity deteriorated.
Gold prices dropped as the dollar edged higher and bond
yields rose. Spot gold dropped 0.3% to $1,835.16 an
ounce, while U.S. gold futures fell 0.26% to $1,835.60 an
ounce.
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(Reporting by Chibuike Oguh in New York; Editing by Will
Dunham)
