# Shares slip, yields rise as U.S. data sparks rate hike concerns
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-12-05
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Global Stocks Slide as U.S. Economy Strengthens, Fed
Meta Description: Global stocks slide and Treasury yields rise as U.S. economy picks up, raising fears of higher interest rates. Stay updated with Reuters for latest news.
URL: https://financedigest.com/shares-slip-yields-rise-as-u-s-data-sparks-rate-hike-concernshtml

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By Herbert Lash and Elizabeth Howcroft

NEW YORK/LONDON (Reuters) -Global stocks slid and Treasury yields rose on Monday as investors ignored an easing of China’s pandemic restrictions that have weighed on global growth after fresh evidence of a strong U.S. [economy raised fears](https://www.financedigest.com/uk-economy-set-for-smaller-hit-in-2023-than-previously-feared-imf.html "UK economy set for smaller hit in 2023 than previously feared – IMF") interest rates will stay higher for longer.

U.S. services industry activity unexpectedly picked up in November, with employment rebounding, in the latest sign of underlying economic momentum that likely will keep the Federal Reserve’s monetary policy tight as it [fights high inflation](https://www.financedigest.com/inflation-fighting-central-bankers-air-climate-role-doubts.html "Inflation fighting central bankers air climate role doubts").

The Institute for Supply Management (ISM) said its non-manufacturing [PMI increased to 56.5 last month](https://www.financedigest.com/uk-factories-suffer-worst-month-since-may-2020-as-economy-stumbles-pmi.html "UK factories suffer worst month since May 2020 as economy stumbles – PMI") from 54.4 in October, which was the lowest reading since May 2020.

“It’s all about the Fed. The Fed doesn’t want the [economy to fall](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") apart, but they want the economy to slow to help counter inflation,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

Good news on the economy is bad news for inflation, whether that’s [China opening up or lower gasoline prices.”](https://www.financedigest.com/oil-prices-rise-as-china-eases-covid-curbs-u-s-storm-fuels-supply-worries.html "Oil prices rise as China eases COVID curbs, U.S. storm fuels supply worries")

Asian shares rose on [hopes that China’s steps to ease its zero-COVID policy would support global growth and increase commodity demand](https://www.financedigest.com/oil-rises-on-demand-hopes-as-banking-crisis-fears-subside.html "Oil rises on demand hopes as banking crisis fears subside"). But the ISM [report on top of last week’s strong](https://www.financedigest.com/strong-nighttime-earthquake-jolts-sleeping-mexicans-at-least-one-death-reported.html "Strong nighttime earthquake jolts sleeping Mexicans, at least one death reported") U.S. jobs [data unnerved investors as they try to assess when the Fed will eventually ease its tightening cycle](https://www.financedigest.com/european-shares-rise-as-us-inflation-data-signals-end-of-rate-hike-cycle.html "European shares rise as US inflation data signals end of rate-hike cycle").

MSCI’s broadest index of Asia-Pacific [shares outside Japan closed 1.38% higher](https://www.financedigest.com/asia-shares-creep-higher-wary-on-fed-and-boj-outlooks.html "Asia shares creep higher, wary on Fed and BOJ outlooks"), but MSCI’s gauge of stocks across the globe shed 0.61%.

The pan-European STOXX 600 index lost 0.33%, while on [Wall Street](https://www.financedigest.com/wall-street-slips-dollar-gains-as-fed-seen-hiking-rates-in-may.html "Wall Street slips, dollar gains as Fed seen hiking rates in May"), the Dow Jones Industrial Average fell 0.72%, the S&P 500 lost 1.04% and the Nasdaq Composite dropped 1.03%.

[Euro zone](https://www.financedigest.com/euro-zone-economic-sentiment-rises-in-january-to-seven-month-high.html "Euro zone economic sentiment rises in January to seven-month high") business activity declined for a fifth month in November, final PMI data showed, suggesting the economy was sliding into a mild recession.

Treasury yields rose on expectations the [Fed will continue to raise rates](https://www.financedigest.com/dollar-falls-after-fed-raises-rates-forecasts-future-hike.html "Dollar falls after Fed raises rates, forecasts future hike") well into next year, though at a slower pace.

The inversion of the yield curve measuring the gap between [yields on two- and 10-year Treasury](https://www.financedigest.com/wall-street-drops-treasury-yields-gyrate-on-fed-chairman-powells-remarks.html "Wall Street drops, Treasury yields gyrate on Fed Chairman Powell’s remarks") notes deepened at -78.3 basis points. The inversion of the curve has been [seen as a recession](https://www.financedigest.com/wall-street-seen-opening-higher-but-u-s-recession-priced-in.html "Wall Street seen opening higher but U.S. recession priced in") harbinger.

The [yield on 10-year Treasury](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") notes rose 7.8 basis points to 3.581%.

The [dollar rose against the pound and the yen after the strong ISM data](https://www.financedigest.com/dollar-skids-after-soft-u-s-economic-data-impact-of-opec-cuts-fades.html "Dollar skids after soft U.S. economic data; impact of OPEC+ cuts fades") for November.

The [Japanese yen](https://www.financedigest.com/japanese-yen-gains-as-ueda-set-to-be-named-next-boj-governor.html "Japanese yen gains as Ueda set to be named next BOJ governor") weakened 1.48% versus the greenback at 136.34 per dollar, while sterling was last trading at $1.219, down 0.79% on the day.

The euro was down 0.26% to $1.0511.

Euro zone government [bonds yields](https://www.financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-gold.html "Global equities gain, as rising bond yields pressure gold") rose, with the benchmark German 10-year bund up 1.3 basis points at 1.889%.

The European [Central Bank should raise interest rates](https://www.financedigest.com/central-banks-keep-hiking-rates-amid-banking-turmoil.html "Central banks keep hiking rates amid banking turmoil") by 50 bps on Dec. 15, French central [bank chief Francois Villeroy](https://www.financedigest.com/ecbs-villeroy-rate-hike-signals-strong-confidence-in-european-banks.html "ECB’s Villeroy: rate hike signals strong confidence in European banks") de Galhau said on Sunday, reinforcing expectations for the ECB to slow the pace of monetary tightening after back-to-back 75 bp increases.

[Investor attention remains](https://www.financedigest.com/6-months-to-go-until-brexit-and-investor-sentiment-remains-bold.html "6 months to go until Brexit and investor sentiment remains bold") focused on the pace of central banks ending their rate-hiking cycles. The Reserve Bank of Australia meets on Tuesday, and is expected to [raise rates](https://www.financedigest.com/european-central-bank-to-raise-deposit-rate-to-3-25-by-mid-year-reuters-poll.html "European Central Bank to raise deposit rate to 3.25% by mid-year: Reuters poll") by a mere 25 basis points. The [Bank of Canada meets on Wednesday and is expected to raise rates](https://www.financedigest.com/instant-view-ecb-sticks-with-big-rate-hike-even-as-bank-fears-roil-markets.html "Instant View: ECB sticks with big rate hike even as bank fears roil markets") by 50 bps.

We expect that growth will take the place of [inflation as the main market focus](https://www.financedigest.com/oil-rises-about-2-with-u-s-and-china-inflation-in-focus.html "Oil rises about 2% with U.S. and China inflation in focus") at some point in the not-too-distant future,” said Geraldine Sundstrom, a portfolio manager at PIMCO, in emailed comments.

[“Central bank](https://www.financedigest.com/central-banks-hike-rates-again-but-a-pause-is-coming.html "Central banks hike rates again, but a pause is coming") rhetoric is starting to point in that direction, but we won’t know for sure until peak inflation is solidly in the review mirror.

[Oil prices](https://www.financedigest.com/shares-fall-with-oil-prices-amid-concerns-about-u-s-fed-rate-hikes.html "Shares fall with oil prices amid concerns about U.S. Fed rate hikes") were mixed. U.S. crude futures fell 0.08% to $79.92 a barrel and Brent rose 0.25% at $85.78.

The Group of Seven price cap on [Russian seaborne oil](https://www.financedigest.com/oil-gains-as-russian-supply-cuts-temper-concerns-over-rate-hikes-high-stocks.html "Oil gains as Russian supply cuts temper concerns over rate hikes, high stocks") came into force on Monday as the West tries to limit Moscow’s ability to finance its war in Ukraine. [Russia has said it will not abide by the measure even if it has to cut](https://www.financedigest.com/pimco-cut-big-position-in-russia-cds-by-adding-bonds-in-q2.html "PIMCO cut big position in Russia CDS by adding bonds in Q2") production.

(Reporting by Herbert Lash; Additional reporting by [Elizabeth Howcroft in London; Editing by Jane Merriman and Lisa Shumaker)](https://www.financedigest.com/34315plane-carrying-coffin-of-queen-elizabeth-lands-in-london.html "Plane carrying coffin of Queen Elizabeth lands in London")


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