Global shares fall, Treasury yields rise as central banks double down on inflation fight

Equities around the world fell while Treasury yields rose on Friday, as markets approached the end of a turbulent week marked by a global push by central banks to quell inflation. On Wall Street, the three main indexes were lower, with materials, utilities and real estate stocks leading declines. The benchmark S&P 500 and the Dow were on track for weekly losses, while the Nasdaq was set to post a weekly gain. The Dow Jones Industrial Average .DJI fell 0.4%, the S&P 500 .SPX fell 0.2%, and the Nasdaq Composite .IXIC fell 0.1%. Stocks in Europe .STOXX fell 1.1% and were headed for a weekly loss. MSCI's gauge of stocks across the globe .MIWD00000PUS fell 0.2%. Monetary policy has been the prime focus this week, as the war in the Middle East nears the seven-month mark with few signs of ending, which is keeping oil prices above $100 per barrel and fanning inflation fears. That has also led to a rise in yields across major government bond markets. "The market is coming to the realization of a higher interest-rate environment on a go-forward basis," said Kieran Osborne, chief investment officer at Mission Wealth. "The Fed clearly indicated that they're likely to raise rates one more time and then central banks globally are sort of on the path to try to rein in inflation. The situation in the Middle East doesn't appear to be abating anytime soon." The yen weakened and Japanese government bonds fell after the Bank of Japan raised rates to a 31-year high of 1.25%. The decision, though expected, excited yen bears with two board members dissenting to the hike. The Japanese yen JPY= weakened 0.6% against the greenback to 156.88 per dollar. The Japanese currency JPY= has risen 1.8% so far this month, driven by expectations of a faster pace of hikes from the BOJ and early signs of repatriation from Japanese investors. The BOJ decision wraps up the series of major central bank meetings in which policymakers have ratcheted up hawkish rhetoric. The Federal Reserve raised rates for the first time in three years on Wednesday and switched to a more aggressive stance on inflation, which knocked the yen, putting it on course for its worst weekly performance against the dollar in two years, down 2.6%. The Bank of England on Thursday left UK rates unchanged but said it may have to hike if the Iran war drags on. The European Central Bank last week also flagged the need for further tightening as it raised rates. And Australia's top central banker on Friday said some of the upside risks to inflation flagged by policymakers appeared to be materialising. The euro EUR= fell 0.1% at $1.1465. The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.1%. Brent crude futures LCOc1 fell 0.1% to $104.67 following a Reuters report that China has asked Tehran to help rein in the Houthis after their military blitz over the past week. That, together with hopes Gulf exporters may find alternative routes to ship oil, put crude futures on course for a weekly decline. Bond yields edged up after another brutal selloff this week that took the 10-year U.S. Treasury yield US10YT=RR beyond 5% to its highest since 2007. It was last up 5.32 basis points at 4.947%. Yields across the euro zone DE10YT=RR and in Britain GB10YT=RR have also hit multi-year highs in the last week, but by Friday were only a touch higher. Spot gold XAU= rose 0.3% to $4,352.77 an ounce.

Global shares fall, Treasury yields rise as central banks double down on inflation fight

Global equities fall as yields rise

Central banks keep pressure on inflation

Oil retreats and bond yields stay elevated

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