Bonds & Stocks
Stock markets retreated Tuesday as investors priced in a protracted period of high interest rates. A selloff in government bonds paused and the dollar steadied. US equity futures slipped, poised to give back Monday's modest gains. Shares in Europe retreated for a fourth day, putting the MSCI All Country World Index, one of the broadest measures of global equities, on track to match its longest losing streak in the past decade.
Economy
The updated Summary of Economic Projections (SEP) showed FOMC members are pretty confident they're on track to engineer a process of "immaculate disinflation" - where inflation comes down without causing much damage to the labor market. Surprisingly, officials also indicated they're growing increasingly certain of this forecast - even amid triple threats from an oil-price surge, UAW strikes, and a potential government shutdown. The diffusion index in the updated SEP shows the lowest degree of uncertainty about the outlook since the pandemic began.
World
European stocks extended their declines to a fourth day on Tuesday, dragged lower by renewed worries over China's property sector and higher bond yields across the developed world. The Stoxx 600 Index fell 0.4% as of 1:06 p.m. in London, with the consumer-products and real estate sectors among the biggest laggards. Luxury stocks including Richemont and LVMH dropped after Morgan Stanley cut earnings estimates for the industry, citing weakness in China. Semiconductor-equipment maker ASM International NV fell after giving earnings guidance that underwhelmed investors.