World stocks tread water as traders eye Fed pause prospects

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European stocks started Tuesday mixed, as soft U.S. economic data reinforced expectations the Federal Reserve may skip an interest rate hike when it meets next week.

and warned that further hikes may be required to ensure inflation returns to target. The RBA's move sets the stage for a slew of monetary policy decisions from major central banks across the globe, with the Fed, the European Central Bank and the Bank of Japan due to hold policy meetings next week.

"We're actually still positioned on the notion that you can get a mild U.S. recession without pulling the world into recession," he said. Markets are pricing in an 82% chance of the Fed standing still, a sharp jump from a 36% chance a week earlier, according to the CME FedWatch tool.in May as new orders slowed, pushing a measure of prices paid by businesses for inputs to a three-year low, which could aid the Fed's fight against inflation.

"The tactical risk for equity investors in the very near term is that the Fed indeed skips a meeting and raises rates in July and not June," said Gary Dugan, CIO of Dalma Capital.

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