- U.S. consumer spending is rising, rising inflation is slowing
- Wall Street rallies disrupt a streak of weekly losses
- Treasury yields are falling
- Brent oil is up $ 2
NEW YORK, May 27 (Reuters) – Global markets rose sharply on Friday as benchmark U.S. Treasury yields fell after data showed that US consumer spending was falling. increase in April and that rising inflation slowed, two signs of the world’s largest. The economy could be on track to grow this quarter.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.9 percent last month, and while inflation continued to rise in April, it was lower than last months. The personal consumption expenditure (PCE) price index rose 0.2%, the smallest gain since November 2020. read more
Wall Street rebounded Friday after the data, with the top three U.S. stock market indices decisively ending its longest weekly loss streak in decades. Read more
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The U.S. Federal Reserve, in minutes of its May meeting released earlier this week, called inflation a serious concern. Most central banks supported two half-percentage point rate hikes in June and July as the group tries to curb inflation without causing a recession.
The Fed left room for a pause in gains if the economy weakens. Read more
Analysts said consumer spending and inflation data were encouraging and supported growth estimates for the second quarter, which are mostly above an annualized rate of 2.0.
“The engine of growth in the U.S. economy is still alive and well, and that’s important,” said Joe Quinlan, head of Cerr Market Strategy at Merrill and Bank of America Private Bank. “Growth estimates for (the second quarter) are still good. There is a better tone in the market than we’ve seen in recent weeks, in terms of possibly maximum inflation here. Maybe we can avoid stagnation.”
The MSCI Global Equity Index (.MIWD00000PUS), which tracks the stocks of 45 nations, rose 2.12% at 16:45 EDT (2045 GMT).
According to Refinitiv Lipper, global equity funds recorded entries during the week through May 25 during the first week in seven weeks. Read more
European stocks (.STOXX) reached a three-week high and rose 1.42%. The British FTSE (.FTSE) also hit a three-week high and was heading for its best weekly projection since mid-March.
The Dow Jones Industrial Average (.DJI) rose 575.77 points, or 1.76%, to 33,212.96, the S&P 500 (.SPX) gained 100.4 points, or 2.47%, to at 4,158.24 and the Nasdaq Composite added <.IXIC <4.8 points. or 3.33%, to 12,131.13.
The yield on 10-year Treasury bonds was the last 2.7432%. It had reached a three-year high of 3.2030% earlier this month for fears that the Fed would have to raise rates quickly to control inflation.
Lower yields show that the Fed’s monetary policy is succeeding in restricting credit and curbing prices, BofA’s Quinlan said.
“The 10-year yield suggests we shouldn’t break inflation above 9-10%,” Quinlan said. “We are close to a peak in inflation.”
The two-year yield, which is rising with traders ’expectations of rising fed fund rates, fell to 2.4839%.
10-year German bond yields fell 4 bp to 0.955%.
Asian stocks (.MIAPJ0000PUS) also benefited from hopes of stabilizing Sino-US ties and further stimulus from the Chinese government. Read more
The United States would not stop China from expanding its economy, but wanted it to adhere to international standards, Secretary of State Antony Blinken said Thursday in a statement that some investors interpreted as positive for bilateral ties. Read more
Shares in emerging markets rose 1.98%. MSCI’s largest Asia-Pacific non-Japan equities index (.MIAPJ0000PUS) closed up 2.17%, while Japan’s Nikkei (.N225) was up 0.66%.
The shift to a generally positive market sentiment brought the dollar to a one-month low against a foreign exchange index.
The dollar index fell 0.059%, and the euro rose 0.06% to $ 1.073.
Oil prices were nearing two-month highs ahead of the prospect of a tight market due to rising U.S. gasoline consumption in the summer, as well as the possibility of a ban on the EU to Russian oil.
U.S. crude was down 98 cents, or 0.86 percent, at $ 115.07 a barrel. Brent was up $ 2.03, or $ 1.73%, at $ 119.43 a barrel.
Cash gold rose 0.2% to $ 1,852.83 an ounce.
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Report by Elizabeth Dilts Marshall in New York Additional report by Chuck Mikolajczak in New York, Carolyn Cohn in London, Stella Qiu in Beijing and Kevin Buckland in Tokyo; Editing by Chizu Nomiyama, Alistair Bell and Matthew Lewis
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