Shares choppy, U.S. yields fall as investors digest Fed minutes
(In Aug. 18 story, corrects Chuck Self's title to chief investment strategist instead of chief investment officer, paragraph 3)
* Wall Street ends higher
* Yield curve remains inverted
* Dollar firmer, oil prices rise nearly 3%
* Benchmark 10-year yields drop
* Safe-haven gold reverses gains
By Chibuike Oguh
NEW YORK, Aug 18 (Reuters) - Global equity markets were choppy and U.S. Treasury yields fell on Thursday, as uncertainty over the pace of interest rate hikes prevailed among investors after the Federal Reserve's meeting minutes showed officials were determined to curb rising prices.
Markets have been volatile amid concerns about a looming recession, even though Fed officials indicated in the minutes of their July meeting released on Wednesday that they would adopt a less aggressive stance if inflation starts to recede.
"The markets are still trying to figure out the Fed minutes," causing volatility, said Charles Self, chief investment strategist at Tandem Wealth Advisors in Appleton, Wisconsin.
"The minutes were uniformly hawkish in our view," Self added. "It's clear that among all the voting members that curing inflation is the No. 1 choice and they're going to do whatever is necessary as far as raising rates to get there. We think they're using the labor market as cover."
MSCI's gauge of stocks in 50 countries across the globe .MIWD00000PUS rebounded from earlier losses and was up 0.05%. The pan-European STOXX 600 index .STOXX closed higher at 0.39%.
U.S. Treasury yields edged lower as investors continued to digest the Fed meeting minutes. A string of Fed officials, including St. Louis Fed President James Bullard and San Francisco Fed President Mary Daly, reiterated on Thursday that the U.S. central bank needs to keep raising interest rates to rein in inflation. Benchmark 10-year notes US10YT=RR were down to 2.8859%, from 2.895% on Wednesday. Two-year notes US2YT=RR retreated to 3.2057%, from 3.295%.
The yield curve between two- and 10-year Treasury notes US2US10=TWEB , widely viewed as an indicator of impending recession, remained inverted at minus 38 basis points on Thursday.
"Since the Fed's July 27 meeting, the two-year yields have been up 43 basis points, meaning that the bond market thinks they're going to raise rates higher for a longer period of time, whereas the stock market has been up 5%, meaning the market thinks they'll raise rates relatively quickly and maybe even decrease rates next year," Self added.
"Well, I think the bond market is usually right."
On Wall Street, major indexes reversed early session losses and ended higher, driven partly by upbeat sales forecast from networking giant Cisco Systems CSCO.O that helped to lift the technology sector. Equities in industrials and energy sectors were also among the top gainers.
The Dow Jones Industrial Average .DJI rose 0.06% to 33,999.04, the S&P 500 .SPX gained 0.23% to 4,283.74 and the Nasdaq Composite .IXIC added 0.21% to 12,965.34.
Oil prices gained nearly 3% as robust U.S. fuel consumption data and an expected drop in Russian supply later in the year offset concerns that slowing economic growth could undercut demand.
Brent LCOc1 futures rose 3.09% to settle at $96.59 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 rose 2.7% to $90.50.
The U.S. dollar index surged to a one-month high after the comments from the Fed officials reaffirming the need for further rate hikes.
The dollar index =USD rose 0.797%, with the euro EUR= up 0.01% to $1.0089.
Gold reversed earlier gains and was lower on a firmer dollar, as investors looked for more economic cues that could influence rate hikes. Spot gold XAU= dropped 0.2% to $1,758.20 an ounce, while U.S. gold futures GCc1 fell 0.28% to $1,755.40 an ounce.
Reporting by Chibuike Oguh in New York; Editing by David Holmes and Matthew Lewis
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