[1/3] Traders at work on the floor of the New York Stock Exchange (NYSE) in New York City, USA, May 4, 2023. REUTERS/Brendan McDermid
SINGAPORE (Reuters) – The U.S. consumer price index rose slightly slower than expected in April, suggesting the Federal Reserve was successful in keeping high inflation under control, data showed. Indicators of global stock markets rose and bond yields fell on Wednesday after the . .
The Labor Department said the consumer price index rose 0.4% after rising 0.1% in March. But in his 12 months to April, the CPI rose his 4.9%, below the 5.0% year-on-year rise in March that analysts had also expected in a Reuters poll.
CME Group’s FedWatch tool showed that the odds of the Fed restarting rate hikes in June fell to 6.1% from 21.9% just before the data was released. The odds of the Fed cutting interest rates later this year have also increased.
But the economy remains strong and it will take time to get inflation down to the Fed’s 2% target, said Johan Grahn, ETF market strategist at Allianz Investment Management in Minneapolis.
“Another strong March jobs report, a 3.4% unemployment rate, 9.5 million job openings and continued wage gains could help the Fed keep its focus on containment of inflation in the coming months. High quality,” Gran said.
“The Fed does not aim to get interest rate policy right just-in-time, but to get it right over time.
Priya Misra, head of global rates strategy at TD Securities in New York, said shelters, a key component of the consumer price index, were a little weaker and some people wanted higher numbers, so the market was buoyant. He said he was relieved.
“There’s a big caveat. It’s the hotel’s fault, not the rent,” she said. “The market may be happy that inflation is lower here. That is true, but we think it will get a little sticky on the way down.”
Yields on 2-year government bonds, which typically fluctuate in line with interest rate expectations, fell to 3.908%, down from 4.05% before the CPI news. The benchmark 10-year bond fell 8.1 basis points to 3.441%.
The dollar retreated on hopes that the Federal Reserve would pause rate hikes to curb high inflation, but oil futures released data on concerns that rising U.S. inventories signaled weakening demand. After that, I gave up on the initial ascent.
The dollar index fell 0.20% and the stock market rose as CPI data suggested the most aggressive Fed rate hike in 40 years was paying off.
MSCI’s gauge of US-focused global stocks (.MIWD00000PUS) rose 0.20% while the pan-European STOXX 600 index (.STOXX) closed down 0.38%.
Wall Street stocks were mixed. The Dow Jones Industrial Average (.DJI) is down 0.09%, the S&P 500 (.SPX) is up 0.45% and the Nasdaq Composite (.IXIC) is up 1.04%.
The Nasdaq was helped by Alphabet (GOOGL.O) gaining 4.1%. The company has beefed up its core search product with artificial intelligence in a bid to compete with Microsoft (MSFT.O), which rose 1.7%.
Headwinds remain looming for the world’s largest economy as detailed talks on raising the US government’s $31.4 trillion debt ceiling began on Wednesday. The Treasury Department has warned that a default could occur as early as June 1.
China crackdown
The foreign exchange market was at a standstill, with the market weighing policymakers’ rhetoric against traders’ belief that US interest rates should fall.
ECB Governing Council member Mario Centeno said the European Central Bank’s key interest rate is nearing its peak but needs further adjustment, and expects rates to start easing sometime next year. I added that there is.
The euro rose 0.19% to $1.0981.
China’s weak import data in April pushed Chinese and Hong Kong stocks down for the second time in a row. This is as investors worry that the market recovery from reopening the economy is fading into an uneven recovery.
Hong Kong’s Hang Seng fell 1.3% as the yuan hit a two-week low.
An apparent crackdown on due diligence firms is disrupting the industry and unnerving investors. Reuters reported that his CICC Capital, a unit of China International Capital (3908.HK), a major Chinese investment bank, has stopped working with consulting firm Capvision.
US crude futures fell 1.6% to $72.56 a barrel and Brent fell 1.3% to $76.41 a barrel.
Gold prices fell as consumer price index data was seen as mixed, prompting some investors to take profits.
US gold futures settled 0.3% lower at $2,037.10 an ounce.
Edited by Simon Cameron Moore
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