LONDON/SYDNEY—World stocks were heading on Friday for a 1 percent loss on the week, drifting from recent two-month highs after U.S. Federal Reserve officials fired more warning shots on interest rates, while the U.S. bond yield curve priced for a recession.
The dollar and bond yields rose after St. Louis Fed President James Bullard said interest rates might need to hit a range from 5-5.25 percent from the current level of just below 4.00 percent to be “sufficiently restrictive” to curb inflation.
That was a blow to investors who had been wagering rates would peak at 5 percent and saw Fed fund futures sell off as markets priced in more chance that rates would now top out at 5–5.25 percent, rather than 4.75-5.0 percent….