- Consumer spending in the United States is rising, inflation is slowing
- Wall Street is rising, interrupting the weekly series of losses
- Government bond yields are declining
- Brent oil rose by $ 2
NEW YORK, May 27 (Reuters) – Global markets enjoyed a wide-ranging rise on Friday as US bond yields fell as data showed that US consumer spending rose in April and inflation slowed, two a sign of the world’s largest economy may be on track to grow this quarter.
Consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.9 percent last month, and although inflation continued to rise in April, it was lower than in recent months. The Consumer Price Index (PCE) rose 0.2%, the lowest increase since November 2020. read more
Wall Street rose on Friday after the data, as all three major US stock indexes ended a decisive end to their longest weekly series of losses for decades. Read more
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The U.S. Federal Reserve, in minutes of its May meeting earlier this week, called inflation a serious concern. A majority of central bankers backed two interest rate hikes of half a percentage point in June and July as the group tried to curb inflation without causing a recession.
The Fed has left room for a pause in the rises if the economy weakens. Read more
Analysts said consumer spending and inflation data are encouraging and support second-quarter growth estimates, which are mostly above 2.0 years.
“The engine of growth in the US economy is still alive and well, and that’s important,” said Joe Quinlan, head of CIO’s market strategy for Merrill and Bank of America Private Bank. “Growth forecasts 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, which is likely to peak here. Maybe we can avoid stagflation.”
The MSCI World Equity Index (.MIWD00000PUS), which tracks stocks in 45 countries, rose 2.12% at 16:45 EDT (2045 GMT).
According to Refinitiv Lipper, in the week to May 25, for the first week in seven weeks, global equity funds recorded flows. Read more
European stocks (.STOXX) peaked at a three-week high of 1.42%. The British FTSE (.FTSE) also reached a three-week high and is heading for its best weekly show 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) rose 100.4 points, or 2.47%, to 4158, 24, and the Nasdaq Composite added <.3IC90. or 3.33%, to 12,131.13.
The yield on the benchmark 10-year treasury bonds was 2.7432%. Earlier this month, it reached a three-year high of 3.2030% due to fears that the Fed may need to raise interest rates quickly to curb inflation.
Lower incomes show that the Fed’s monetary policy has managed to tighten credit and slow prices, said Quinlan of BofA.
“The 10-year yield suggests that we do not need to have a break in inflation above 9-10%,” Quinlan said. “We are approaching the peak of inflation.”
The two-year yield, which rose with traders’ expectations of higher interest rates on federal funds, fell to 2.4839%.
German 10-year bond yields fell 4 basis points to 0.955%.
Asian stocks (.MIAPJ0000PUS) also took advantage of hopes of stabilizing Sino-US ties and more incentives from the Chinese government. Read more
The United States will not block China from expanding its economy, but wants it to adhere to international rules, Secretary of State Anthony Blinken said Thursday in remarks that some investors interpreted as positive for bilateral ties. Read more
Shares in emerging markets rose 1.98%. MSCI’s broadest Asia-Pacific stock index outside Japan (.MIAPJ0000PUS) closed 2.17% higher, while Japan’s Nikkei (.N225) rose 0.66%.
The swing to broadly positive market sentiment brought the dollar to one-month lows against a currency index.
The dollar index fell 0.059% and the euro rose 0.06% to $ 1.073.
Oil prices were close to two-month highs in the tight market outlook due to rising gasoline consumption in the United States over the summer, as well as the possibility of an EU ban on Russian oil.
US crude oil rose 98 cents, or 0.86 percent, to $ 115.07 a barrel. Brent was up $ 2.03, or 1.73%, at $ 119.43 a barrel.
Spot gold added 0.2% to $ 1,852.83 an ounce.
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Report by Elizabeth Dilts Marshall in New York Additional reports by Chuck Mikolajczak in New York, Carolyn Cohn in London, Stella Kiu in Beijing and Kevin Buckland in Tokyo; Edited by Chizu Nomiyama, Alistair Bell and Matthew Lewis
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