Equities fall, Treasury yields rise ahead of FOMC minutes

Global equities fell while US Treasury yields rose on Wednesday ahead of the release of the Fed’s meeting minutes that are expected to reveal the extent of officials’ hawkish stance on interest rates and inflation.

MSCI’s gauge of stocks in 50 countries across the globe (.MIWD00000PUS) shed 0.94%, while the pan-European STOXX 600 index (.STOXX) lost 0.91%.

US Treasury yields advanced ahead of the publication of the Fed’s meeting minutes. The Benchmark 10-year notes rose to 2.9041%, from 2.824% on Tuesday. The two-year note gained to 3.3539%, from 3.251%.

On Wall Street, all three main indexes were lower, with technology, consumer discretionary and communication services leading the sell-off. The Dow Jones Industrial Average (.DJI) fell 0.82% to 33,870.33, the S&P 500 (.SPX) 1.12% to 4,256.86 and the Nasdaq Composite (.IXIC) dropped 1.73%, to 12,875.98.

The minutes, due on Wednesday, could signal whether the US central bank would likely adopt a third consecutive 75-basis point rate hike at its September meeting to tame rising inflation.

Data since the Fed’s last policy meeting have showed a moderation in consumer prices and other economic indicators, leading traders to expect slower rate increments. US consumer prices were flat while producer prices fell in July.

Markets do not see any meaningful change in policy from the Fed as long as the labour market and wages remain robust. That tone could be apparently expressed by the minutes this afternoon.