World markets slipped Wednesday after Wall Street fell the most since June 2020 as a report showed inflation has kept a surprisingly strong grip on the U.S. economy.
European benchmarks were marginally lower while Asia saw bigger losses. U.S. futures edged higher, with the contracts for the Dow industrials and the S&P 500 up 0.3%. European futures were lower.
Germany's DAX lost 0.2% to 13,165.86 and the CAC 40 in Paris gave up 0.3% to 6,2275. Britain's FTSE 10 shed 0.7% to 7,334.75. The futures for the Dow industrials and S&P 500 both were down about 0.3%. The U.S. is meanwhile reportedly considering new sanctions against Beijing aimed at deterring aggression against Taiwan, a self-governed island democracy that China claims as its own territory.
On Tuesday, the Dow lost more than 1,250 points and the S&P 500 sank 4.3% after Tuesday's hotter-than-expected report on inflation. The Nasdaq composite closed 5.2% lower.The yield on the two-year Treasury, which tends to track expectations for Fed actions, soared to 3.74% from 3.57% late Monday. The 10-year yield, which helps dictate where mortgages and rates for other loans are heading, rose to 3.42% from 3.36%.
Higher rates hurt the economy by making it more expensive to buy a house, a car or anything else usually purchased on credit. Mortgage rates have already hit their highest level since 2008, creating pain for the housing industry. The hope is that the Fed can pull off the tightrope walk of slowing the economy enough to snuff out high inflation, but not so much that it creates a painful recession.
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