Global stocks dip, dollar strengthens on Fed talk

Mon Mar 21, 2016 4:20pm EDT
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By Chuck Mikolajczak

NEW YORK (Reuters) - Global equity markets edged lower on Monday as the dollar strengthened and U.S. Treasury yields rose on hawkish commentary from several Federal Reserve officials.

Richmond Fed President Jeffrey Lacker said U.S. inflation is likely to accelerate in the coming years and move toward the Federal Reserve's 2 percent target, while San Francisco Fed President John Williams told Market News International he would advocate for another interest rate hike as early as the April meeting.

In addition, Atlanta Fed President Dennis Lockhart said the Fed may be in line for a rate hike as soon as April, as last week's decision to hold rates steady was more about ensuring that recent global financial volatility had settled down.

"He (Lockhart) reiterated that every meeting is a 'live' meeting going forward and I think that overall somewhat hawkish tone to his comments is largely what's helping support the dollar this afternoon," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange Inc in Washington.

The dollar .DXY rose 0.29 percent to 95.357 against a basket of major currencies. The greenback had fallen in the three prior weeks for a decline of 3.1 percent.

The currency fell last week when Fed policymakers revised down the number of times they expect to raise interest rates this year to two from four.

Benchmark 10-year notes US10YT=RR were last down 13/32 in price to yield 1.9173 percent, from 1.87 percent on Friday.

The stronger dollar weighed on European equities, with the pan-European FTSEurofirst stock index .FTEU3 closing down 0.25 percent to start a week shortened by the Easter break.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) March 16, 2016. REUTERS/Brendan McDermid