European stocks slip and U.S. bond yields rise as markets react to Fed shift

Markets took a hawkish read of the news that the Fed’s summary of economic projections showed two interest rate increases in 2023 and that it has begun discussing when to slow down the rate of bond purchases. “It might not seem like much, but this move caught the bond traders flat-footed. This was astounding given they had already expected a hawkish surprise. The Fed managed to out-hawk even the hawkish expectations,” said Kevin Muir, the veteran trader and author of The MacroTourist blog.

The yield on the 10-year Treasury TMUBMUSD10Y, 1.565% was 1.56% after holding below 1.50% for several days.

Most sectors in Europe pulled back, though banks including HSBC Holdings HSBA, +2.53% and BNP Paribas BNP, +3.30% rose, on the prospect for higher bond yields and better margins.

Travel and leisure stocks also advanced, with airlines Ryanair RY4C, +3.20% and easyJet EZJ, +3.75% each advancing 4% amid speculation the U.K. could ease travel restrictions.

Premier Inn operator Whitbread WTB, +2.77% rose 4%, after reiterating its outlook for the year, following a fiscal first quarter in which like-for-like sales were 71% below two years ago.

Embattled ticket seller Trainline TRN, +3.17% jumped 6%, after reporting that its first-quarter ending May 31 revenue jumped 324%. It said net ticket sales at the end of the quarter were 52% of fiscal 2020, the best level since the COVID-19 pandemic began.