* Equities falter, but dollar rises after release of Fed
* Bonds fall as many investors still see tapering in
* Oil prices fall on reports Libya may resume exports
By Herbert Lash
NEW YORK, Aug 21 Global equity markets and bond
prices slid while the dollar strengthened on Wednesday after
minutes from the latest Federal Reserve policy-setting meeting
did not alter expectations the Fed would eventually begin to
trim its bond-buying program.
U.S. equities dropped to session lows, rebounded to trade in
positive territory, and fell again after the afternoon release
of minutes from the Fed's policy-setting meeting in late July.
The minutes showed differences among members of the Federal
Open Market Committee as to when the Fed should start winding
down its stimulus but did not materially change the market's
expectation of a September tapering.
"If investors were looking for strong, clear signals from
this month's FOMC minutes, they were disappointed," said Andrew
Milligan, head of global strategy at Standard Life Investments
"All is open for a September decision on tapering, but this
still depends on the economic data in coming days and weeks
pointing to a firm upturn in the economy," Milligan said.
The minutes show the Fed did not wish to alter the message
it gave following its policy-setting meeting in June and did not
wish to alter market expectations, said Alan Ruskin, global head
of foreign exchange strategy at Deutsche Bank in New York.
Yields on the benchmark 10-year U.S. Treasury note soared to
almost 2.9 percent, a level last seen in July 2011.
Investors and traders have been cautious recently, with the
benchmark S&P 500 stock index dropping five of the past six
sessions, amid uncertainty over when the Fed will begin to wind
down its $85 billion a month stimulus program.
"It's only a question of how much they are going to let up
on the gas, there is no question they will not be tapping on the
brakes," said Erik Davidson, deputy chief investment officer for
Wells Fargo Private Bank in San Francisco.
The Dow Jones industrial average closed down 105.44
points, or 0.70 percent, at 14,897.55. The Standard & Poor's 500
Index fell 9.55 points, or 0.58 percent, at 1,642.80. The
Nasdaq Composite Index fell 13.80 points, or 0.38
percent, at 3,599.79.
MSCI's all-country stock index was down 0.85
percent at 367.09, while the pan-European FTSEurofirst 300 index
of top regional shares closed down 0.6 percent at
The dollar edged higher from a six-month low against the
euro and gained versus the yen.
The euro was down 0.43 percent at $1.3358. The dollar
index, which measures the greenback versus a basket of six
currencies, rose 0.51 percent to 81.315. Against the yen,
the dollar rose 0.5 percent to 97.75.
U.S. Treasuries prices fell, as did German bond prices
before the release of the Fed minutes.
The benchmark 10-year U.S. Treasury note was
down 21/32 in price to yield 2.8935 percent.
German 10-year bond yields rose as high as 1.892 percent,
just below levels on Monday that were the highest since March
2012, and last yielded about 1.87 percent.
German Bund futures settled 47 ticks lower at
Before the minutes were released, a report showed U.S. home
resales rose in July to the highest level in over three years,
suggesting sharply rising borrowing costs are having only a
limited impact on the housing market's recovery.
The National Association of Realtors said on Wednesday that
existing home sales jumped 6.5 percent, well above analysts'
expectations, to an annual rate of 5.39 million units.
Analysts said the August nonfarm payrolls data, due on Sept.
6, will be closely watched by investors and policymakers to
determine whether improvement in the U.S. labor market is enough
to justify scaling back stimulus.
Half the economists polled by Reuters expect the Federal
Open Market Committee to begin slowing its asset purchases from
Brent crude oil fell below $110 a barrel on reports some
Libyan oil exports might soon resume and on news the Seaway
crude oil pipeline had shut, halting shipments from the U.S.
Midwest to the Gulf Coast.
Brent futures for October settled down 34 cents at
$109.81 a barrel. U.S. October oil fell $1.26 to settle
at $103.85 a barrel.