Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Equities rise, yields fall after data shows U.S. inflation may have peaked

Economy May 28, 2022 05:39
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. A man wearing a protective face mask, amid the coronavirus disease (COVID-19) pandemic, walks past a screen showing Shanghai Composite index, Nikkei index and Dow Jones Industrial Average outside a brokerage in Tokyo, Japan, February 14, 2022. REUTERS/Kim 2/2

By Elizabeth Dilts Marshall

NEW YORK (Reuters) - World shares rose and the yield on benchmark U.S. Treasuries weakened on Friday after data showed that U.S. consumer spending rose in April and the uptick in inflation slowed, two signs the world's largest economy could be on track to grow this quarter.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.9% last month, and although inflation continued to increase in April, it was less than in recent months. The personal consumption expenditures (PCE) price index rose 0.2%, the smallest gain November 2020.

The U.S. Federal Reserve, in minutes from its May meeting released earlier this week, called inflation a serious concern. A majority of the central bankers backed two half-of-a-percentage point rate hikes in June and July, as the group attempts to curb inflation without causing a recession.

The Fed did leave room for a pause in hikes if the economy weakens.

Analysts said the consumer spending and inflation data was encouraging and supported growth estimates for the second quarter that are mostly above a 2.0 annualized rate.

"The growth engine of the U.S. economy is still alive and kicking, and that's important," said Joe Quinlan, Head of CIO Market Strategy for Merrill and Bank of America (NYSE:BAC) Private Bank. "Growth estimates for (the second quarter) are still good. There is a better tone in the market than we have seen in recent weeks, in terms of inflation possibly peaking here. Maybe we can avoid stagflation."

The MSCI world equity index, which tracks shares in 45 nations, rose 1.78% at 2:50 p.m. EDT (1850 GMT).

Global equity funds saw inflows in the week to May 25 for the first week in seven, according to Refinitiv Lipper.

European shares hit a three-week high rose 1.42%. Britain's FTSE also hit a three-week high, and was heading for its best weekly showing since mid-March.

The Dow Jones Industrial Average rose 368.34 points, or 1.13%, to 33,005.53, the S&P 500 gained 75.33 points, or 1.86%, to 4,133.17 and the Nasdaq Composite added 319.75 points, or 2.72%, to 12,060.40.

The yield on benchmark 10-year Treasury notes was last 2.7432%. It had hit a three-year high of 3.2030% earlier this month on fears that the Fed may have to raise rates rapidly to bring inflation under control.

Lower yields shows the Fed's monetary policy is succeeding in tightening credit and slowing down prices, said BofA's Quinlan.

"The 10 year yield is suggesting we don't have to have inflation break above 9-10%," Quinlan said. "We are getting close to a peak in inflation."

The two-year yield, which rises with traders' expectations of higher fed fund rates, fell to 2.4839%.

German 10-year bond yields fell 4 bps to 0.955%.

Asian shares also benefited from hopes of stabilizing Sino-U.S. ties and more Chinese government stimulus.

The United States would not block China from growing its economy, but wanted it to adhere to international rules, Secretary of State Antony Blinken said on Thursday in remarks that some investors interpreted as positive for bilateral ties.

Emerging market stocks rose 2.01%. MSCI's broadest index of Asia-Pacific shares outside Japan was 2.23% higher, while Japan's Nikkei rose 0.66%.

The swing toward broadly positive market sentiment drove the dollar to one-month lows against an index of currencies.

The dollar index last fell 0.02%, with the euro up 0.03% to $1.0727.

Oil prices were near two-month highs on the prospect of a tight market due to rising gasoline consumption in the United States in summer, and also the possibility of an EU ban on Russian oil.

U.S. crude settled 98 cents higher, or up 0.86%, at $115.07 a barrel. Brent settled $2.03 higher, or up 1.73%, at $119.43 a barrel.

Spot gold added 0.2% to $1,852.83 an ounce.

Equities rise, yields fall after data shows U.S. inflation may have peaked
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email