Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Investing

Stocks rally, dollar stable after jump in U.S. CPI data

Stocks close near highs as bond yields dip

Published : , on

By Herbert Lash and Simon Jessop

NEW YOR/LONDON (Reuters) – Global stocks surged and the dollar held steady on Thursday as investors took in their stride a spike in U.S. inflation that was higher than expected but not big enough to shake the Federal Reserve’s stance that rising consumer prices will be transitory.

MSCI’s all-country world index surged to a record intra-day high after the U.S. Labor Department earlier said the consumer price index in the 12 months through May accelerated 5.0%, the biggest year-on-year increase since August 2008.

The benchmark 10-year U.S. Treasury yield rose 3.0 basis points to 1.5194% after the data’s release, while the dollar index was essentially flat, down 0.08%.

An initial sell-off in bonds was muted and for the most part the CPI report was pretty much in line with expectations, said Subadra Rajappa, head Of U.S. rates strategy at Societe Generale in New York.

“The market is really buying into the narrative that the rise in inflation is in fact transient because you’re not seeing that necessarily being priced into fears in the bond market,” Rajappa said.

Many investors believe growth is going to slow, perhaps significantly, and will trump any acceleration in inflation, which is still going to be temporary, said Joseph LaVorgna, chief economist for the Americas at Natixis in New York.

“If it turns out the economy is weaker in the next three to six months than people think, it won’t even matter if inflation continues to surprise to the upside,” LaVorgna said.

“The (equity) market is going to ignore the data. It’s going to rally regardless,” he said.

On Wall Street, the Dow Jones Industrial Average rose 0.8%, the S&P 500 gained 0.67% and the Nasdaq Composite added 0.64%.

Risk assets have remained buoyant as central bankers on both sides of the Atlantic signaled their willingness to keep the monetary taps open until the post-pandemic recovery takes hold, believing inflationary pressures to be short-lived.

A surprisingly strong U.S. inflation print in April spooked some investors, leading to a cautious run into the release on Thursday of the May data.

With the euro zone lagging in the pace of its recovery from COVID-19, the European Central Bank maintained an elevated flow of stimulus as expected on Thursday.

Overnight, fixed income markets were the big movers, with some analysts pointing to a setback to more U.S. stimulus efforts, while others suggested a likely clearing out of short positions in U.S. government bonds ahead of the May CPI.

Short positions in Treasuries were the highest since 2018, according to JP Morgan positioning data last week.

(Additonal reporting by Swati Pandey in Sydney and Thyagu Adinarayan in London; Editing by Ana Nicolaci da Costa, Christopher Cushing, Angus MacSwan, Catherine Evans and Jane Merriman)

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post