London — World equity markets held close to record highs on Tuesday, as investors latched on to rising bets on higher borrowing costs in the US and Britain. Reports that US President Trump might pick Stanford University economist John Taylor to lead the Fed after Janet Yellen’s term ends next year sent two-year treasury yields to their highest since 2008 and pushed up the dollar. That meant European bonds started in the red too while the euro was down for a fourth consecutive day for the first time since May. Taylor is an advocate of a rules-based approach to interest rate policy that is likely see official Fed rates much higher than at present — at least 3.5% according to some economists. The pop in short-yields was not matched at the long end and the two- to 10-year US yield curve hit its shallowest in more than a year. "Fed chairs have often influenced US monetary policy quite considerably in the past. And I would certainly see Taylor as a candidate who would fit in this pattern,...
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