Stocks in the United States soared to new heights, and bonds surged after debates whether the Federal Reserve will start easing stimulus continues.
After statistics indicated that CPI jumped to 0.5 percent in July after gaining 0.9 percent in June, the Dow Jones Industrial Average and S&P 500 indices soared to new highs.
The S&P 500 has nearly doubled from its trough in March 2020. The Nasdaq 100, a recognized technology-heavy index, also fell as investors shifted their focus from conventional growth stocks like Amazon.com towards more cyclical stocks. On the other hand, the government’s auction of 10-year notes was greeted with robust demand, extending Treasuries’ gains.
As Jerome Powell, the Federal Reserve Chair, and other officials explore the possibility of unwinding stimulus, investors have been focusing on U.S. pricing data. President of the Kansas City Fed, Esther George, asserted that the central bank has to reduce financial stimulus, citing sustained labor market improvements as justification.
Taper debate heats up
The chief investment strategist of Capital Network, Anastasia Amoroso, stated that the Fed should be comfortable with the report.
Still, the Fed’s taper statement released in September did not offer definitive conclusions. She added that policymakers should consider how the new Delta variant affects the hospitality and leisure sectors. It is anticipated that due to Covid-19, we may notice a drop in activity in August.
While the CPI statistics were in line with expectations, it may take many months of data to determine if inflation will remain temporary or not. For example, CPI increased 5.4 percent year over year, contrary to a projection of 5.3 percent.
In other headlines, crude oil has climbed up as the dollar fell following a rumor that the US would pressure OPEC to restart production rapidly.
Royal Ahold Delhaize NV and ABN Amro Bank NV, which owns Stop & Shop, have also reported excellent profits, pushing the Stoxx Europe 600 Index higher.
Even after the Senate approved a bill on infrastructure, with extensive control of virtual currencies, Bitcoin has still climbed back to over $46,000. Meanwhile, after a report showed inventories falling, palm oil has also obtained its largest daily gain since 2009.
Movements in the markets
Here is the list of movements in the markets:
- A drop of 0.2 percent in the Bloomberg Dollar Spot Index.
- Euro gained 0.2 percent to $1.1742.
- Value of the British pound increased by 0.2 percent to $1.3870.
- Yen climbed 0.1 percent to 110.41 per dollar.
- As of 4:01 p.m, New York time, the S&P 500 raised to 0.2 percent.
- The Nasdaq 100 index dropped 0.2 percent.
- Increase of 0.6% Dow Jones Industrial Average.
- There has been a rise in the MSCI World index by 0.3%.
- The price of West Texas Intermediate oil increased by 1.5 percent to $69.33 per barrel.
- The price of gold futures hiked from 1.3 percent to $1,754.20 per ounce.
- Ten-year Treasury yields fell two basis points to 1.33 percent.
- The 10-year yield of Germany remained unchanged at -0.46 percent.
- The 10-year yield in the United Kingdom fell two basis points to 0.57 percent.