Bond Yields Fall on Bets Fed Nearing End of Hikes: Markets Wrap

(Bloomberg) -- Treasury yields fell and stocks rose after data showing a slowdown in inflation bolstered speculation the Federal Reserve is nearing the end of its interest-rate hikes.

The S&P 500 headed toward its highest since April 2022, while the tech-heavy Nasdaq 100 outperformed. Two-year yields, which are more sensitive to imminent policy moves, dropped 14 basis points to around 4.75%. The dollar slipped to a 15-month low. Brent crude climbed above $80 a barrel for the first time since May.

The consumer price index rose 3% last month from a year ago. The so-called core measure — which economists view as the better indicator of underlying inflation — advanced 4.8%, the lowest since late 2021, but still well above the Fed's target.

“There is nothing not to like in the report,” said Ronald Temple, chief market strategist at Lazard. “Better-than-expected data increases the likelihood that a Fed rate increase on July 26 will be the last of this cycle. It's too early to pop the champagne, but it's not too early to start chilling the bottle.”

In corporate news, Facebook's parent Meta Platforms Inc. led gains in megacaps, climbing toward its highest since February 2022. Domino's Pizza Inc. jumped on a third-party ordering agreement with Uber Technologies Inc. Microsoft Corp. is set for a second shot at winning UK approval for its takeover of Activision Blizzard Inc., but regulators warned that any antitrust fixes would trigger a new probe.

Key events this week:

• China trade, Thursday
• Eurozone industrial production, Thursday
• US initial jobless claims, PPI, Thursday
• US University of Michigan consumer sentiment, Friday
• US banks kick off earnings, Friday

Some of the main move in markets:

Stocks

• The S&P 500 rose 0.8% as of 1:14 p.m. New York time
• The Nasdaq 100 rose 1.1%
• The Dow Jones Industrial Average rose 0.4%
• The MSCI World index rose 1.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.9%
• The euro rose 1.1% to $1.1128
• The British pound rose 0.4% to $1.2990
• The Japanese yen rose 1.4% to 138.39 per dollar

Cryptocurrencies

• Bitcoin fell 0.3% to $30,473.17
• Ether rose 0.7% to $1,887.28

Bonds

• The yield on 10-year Treasuries declined 12 basis points to 3.85%
• Germany's 10-year yield declined seven basis points to 2.58%
• Britain's 10-year yield declined 15 basis points to 4.51%

Commodities

• West Texas Intermediate crude rose 1% to $75.59 a barrel
• Gold futures rose 1.3% to $1,962.90 an ounce

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Brett Miller, Tassia Sipahutar, Robert Brand, Emily Graffeo, Isabelle Lee, Ksenia Galouchko and Allegra Catelli.

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