US Treasuries and Wall Street stocks rose Wednesday as US inflation data came in slightly below expectations, boosting traders’ belief that the Federal Reserve will stop its interest rate hikes.
The US benchmark S&P 500 gave up early gains but climbed 0.2% at midday, while the tech-heavy Nasdaq Composite was up 0.7%, briefly climbing to its highest level since August.
The interest rate sensitive two-year Treasury yield fell 0.07 percentage points to 3.95%, while the 10-year yield fell 0.06 percentage points to 3.45%.
Data from the US Bureau of Labor Statistics showed consumer price inflation for April fell to 4.9%, its lowest level since April 2021, slightly below forecasts of 5%. The consumer price index rose 0.4% month-on-month in April, compared to 0.1% in March.
The news fueled investors’ hopes that the Poweredlast week’s decision to raise its key interest rate to a target range of 5% to 5.25% would mark the end of its monetary tightening campaign. After more than a year of aggressive rate hikes, US interest rates are at their highest level since mid-2007.
“This should give the Fed everything it needs now to hit the pause button on rate hikes,” said Richard Carter, head of fixed rate research at Quilter Cheviot.
In Europe, regional benchmark Stoxx 600 fell 0.4%, while London’s FTSE 100 fell 0.3%.
Traders are also paying attention to the political negotiations on the US debt ceiling. Yesterday President Joe Biden implored republicans to “take the threat of default off the table” after failing to achieve a breakthrough in a meeting with congressional leaders.
“The debt ceiling issue is very serious, but the markets are not reacting yet, and I am stressing this again,” said Mike Zigmont, head of trading at Harvest Volatility Management. “If the calculated risk policy becomes too risky, the markets will freak out. If the US is indeed in default, see below.”
Francesco Pesole, currency strategist at ING, said there was “growing concern that a market sell-off in equity or money markets might actually be needed to break the impasse.”
In Asia, Hong Kong’s Hang Seng index fell 0.5% and China’s CSI 300 index lost 0.8%.
China’s import volume contracted the most in a year last month, while exports rose at a slower-than-expected pace, raising concerns about the pace of the country’s economic recovery since Beijing abandoned tough anti-government measures. Covid at the end of 2022.
“The downturn in China’s exports may still have a way to run before bottoming out later this year,” said Zichun Huang, a China economist at Capital Economics.
—————————————————-
Source link