Stocks fall, yields rise as investors focus on Fed and other central bank meetings

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  • The Swedish central bank raises 1 percentage point
  • The Fed, BoE and Swiss central banks are watching
  • US 2-year bond yield at nearly 15-year high

NEW YORK, Sept 20 (Reuters) – Global stocks fell sharply on Tuesday as the yield on two-year U.S. Treasuries hit a nearly 15-year high as investors braced for the likelihood of a further rise 75 basis points of the federal rate. Reserve.

Sweden’s central bank raised interest rates a full percentage point higher than expected to 1.75% and warned more were to come over the next six months. Read more

The Fed begins its two-day meeting on Tuesday. Britain, Norway, Switzerland and Japan also have monetary policy meetings this week.

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The US two-year note is very sensitive to changes in monetary policy expectations and early Tuesday it hit 3.992%. The last time its return exceeded 4% was on October 18, 2007.

Yields on the benchmark 10r treasury jumped 11.1 basis points to 3.600%, after rising above 3.5% for the first time in 11 years on Monday. The two-year yield rose 4 basis points to 3.986%.

Rising interest rates and persistently high inflation – and their impact on the global economy – captured the attention of investors in all markets.

“The key to tomorrow will be guidance from the Fed chief as to the next possible move,” said Peter Cardillo, chief economist at Spartan Capital Securities LLC.

On Wall Street, shares of rate-sensitive growth companies underperformed, while Ford Motor Co (FN) fell after the automaker said inflation-linked supplier costs would be around $1 billion forecast in the current quarter.

The Dow Jones Industrial Average (.DJI) fell 327.26 points, or 1.06%, to 30,692.42, the S&P 500 (.SPX) lost 37.91 points, or 0.97%, to 3,861.98 and the Nasdaq Composite (.IXIC) fell 53.52 points, or 0.46%, to 11,481.50.

The pan-European STOXX 600 index (.STOXX) lost 1.06% and the MSCI gauge of stocks across the world (.MIWD00000PUS) lost 0.70%.

The dollar rose, trading near a two-decade high as investors remained firm on expectations of another aggressive rate hike by the Fed.

The dollar index was on course for its fifth weekly gain in six and its latest rise of 0.5% to 110.04 . It hit 110.79 at the start of the month for the first time since June 2002.

“Traders and investors are hiding, aware that the dollar is behaving like a force of nature and unwilling to face its wrath,” said Karl Schamotta, chief market strategist at Corpay in Toronto.

The Swedish central bank’s rate hike was bigger than analysts had expected, causing the Swedish krona to rise briefly against the euro and the dollar.

Hikes from the Bank of England and the Swiss central bank are expected on Thursday.

The Chinese central bank kept its key rates unchanged at a monthly fixing on Tuesday, as expected. Read more

The other exception is the Bank of Japan, which is also due to meet this week and has shown no sign of abandoning its ultra-loose yield curve policy despite a drastic drop in the yen and inflation at its pace. fastest in eight years. Read more

In energy, U.S. crude recently fell 1.78% to $84.20 a barrel and Brent to $90.56, down 1.57% on the day.

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Additional reporting by Huw Jones in London and Devik Jain and Ankika Biswas and Gertrude Chavez-Dreyfuss; Editing by Edwina Gibbs, Will Dunham and Alison Williams

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