As the rise in global bond yields paused, contracts on the S&P 500 and Nasdaq rose about 0.2 per cent after the underlying index suffered their biggest daily losses in two weeks. Europe's Stoxx 600 equity benchmark slipped about 0.2 per cent. Markets remain on tenterhooks, however, ahead of more testimony from the Fed chief later on Wednesday, with Treasury yields still marginally higher on the day and the dollar holding close to this year's peak.
“We would be foolhardy to expect we can't reach six per cent on Fed rates, and clearly that has an impact on asset markets across the globe,” Rabobank strategist Jane Foley told Bloomberg Television. If the Fed has to work harder to get inflation down, “that certainly does imply recession,” she added.
The pain is hitting emerging markets, with MSCI's emerging equity gauge losing as much as 1.6 per cent, while a decline in China's yuan saw the central bank signal its intention to support the currency.