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US stocks, bonds gain on iffy inflation outlook

Jul 14 2017 16:11
Eddie van der Walt and Adam Haigh, Bloomberg

London - Bonds and US stocks rose as US inflation data came in short of Federal Reserve expectations.

The S&P 500 Index was up slightly at the open. Treasuries headed for their first weekly gain in three, bolstered by Fed Chair Janet Yellen’s gradualist tone to policy tightening as inflation languishes below the central bank’s 2% target. Bunds rose for the first day in four.

A gauge of the dollar fell for the fifth day, its longest streak of losses in two months. S&P 500 index futures were little changed after financial shares led gains yesterday. JPMorgan Chase & Co and Citigroup reported quarterly earnings that were largely in line with expectations, although fixed-income revenue was hurt by low volatility.

The pace of recent inflation in the world’s largest economy has become even more pertinent after Yellen hinted in a congressional testimony this week that sluggish price rises have structural causes. The weak June consumer price index number continues more than a quarter of poor progress at a time when some Fed officials are hinging their support for further rate rises on the inflation outlook in this figure.

Retail sales also unexpectedly dropped for a second month in June, signaling consumers are providing only modest support for the US economy.

Here are the main moves in markets:

Stocks

The S&P 500 was up 0.1% to 2 449.23 at 16:35. The Dow Jones Industrial Average was essentially unchanged at 21 546.03, while the Nasdaq 100 added 0.3%. The Stoxx Europe 600 was little changed after a weekly gain of 1.6%. The measure headed for its first consecutive weekly advance since May 12.

Currencies and Bonds

The Bloomberg Dollar Spot Index was down 0.5%, near its lowest since September. The pound added 0.6% to $1.30, and the euro gained 0.4% to $1.1442. Benchmark 10-year US Treasury yields fell six basis point to 2.29%, while sovereign yields across Europe also declined with the benchmark bund yield dropping four basis points and French peers five basis points lower.

Commodities

West Texas Intermediate crude rose 0.7% to $46.39 a barrel for a weekly advance of nearly 5%. Gold was up 1.1% at $1 231.02 an ounce. Zinc is on track to snap three weeks of gains after inventories available to investors on the London Metal Exchange surged by the most on record.

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equities  |  wall street  |  markets

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