Stocks mixed following hawkish Fed, bond yields selloff intensifies

investmentnews.com:

US equity futures hinted at recovery from Wednesday’s retreat, even as a selloff intensified across bond markets worldwide. 

S&P 500 contracts added 0.2%, while Europe’s equity benchmark slipped 0.4%, falling under its 200-day moving average for the first time since March. While many investors had believed that the Federal Reserve was done raising interest rates, that’s no longer a sure thing after minutes from last meeting suggested officials are considering tighter policy. 

The moves across bond markets have been sharp and swift this week. The 10-year Treasury yield rose three basis points to 4.29% on Thursday, approaching the highest level since 2007. In the UK, equivalent maturity gilts were at 4.71%, the highest since the financial crisis of 2008. Japan’s 20-year bond yield surged after a debt auction drew tepid investor demand.

“Markets are taking the prospect of another hike from the Fed increasingly seriously, with futures now pricing in a 45% chance of a further hike by the November meeting,” Deutsche Bank AG strategist Jim Reid wrote. “Investors are adjusting to the fact that rates could remain at a higher level for some time.”

Treasuries have been a key driver of the global debt selloff as resilience of the world’s largest economy defies expectations that a run of Federal Reserve interest-rate hikes would spark a recession. In the UK, the surge in gilt yields comes after sticky inflation and strong wage data boosted investor bets that the Bank of England will need to raise interest rates further to 6% and keep them high for longer.

In corporate news, BAE Systems Plc agreed to buy the aerospace division of soda-can giant Ball Corp. for $5.6 billion. Shares of BAE fell as much as 4.8% in London, its biggest drop