Treasury yields drop as investors bet on Fed policy

by Jonathan Adams

The Dow rose 0.06% at 34,466 while the S&P advanced 0.47%. Nasdaq added 0.78%

Benchmark Treasury yields continued to drop, hitting their lowest levels since March as investors bet the Fed will continue with its ultra-accommodative policies even amid higher consumer prices. Benchmark Treasury yields closing down 5 bps at 1.44%.

All the three major U.S. stock indexes advanced, with Nasdaq rising on megacap stocks. S&P 500 finished at record high levels as investors ignored highest inflation levels in nearly 13 years.

Consumer prices for May rose at 5%, their highest pace since 2008 as the economy continued to recover. In employment news, first-time unemployment benefit claims dropped 9,000 to 376,000 (the lowest level of claims since March 2020) in the week ended June 5, according to U.S. weekly initial jobless claims.

The Dow rose 0.06% at 34,466 while the S&P advanced 0.47%. Nasdaq added 0.78%.

In Europe, stocks scaled new highs as the European Central Bank raised its economic recovery outlook and promised to continue with the stimulus.

The ECB raised its 2021 euro zone economic growth projections to 4.6%, from its last projection of 4% in March.

Inflation projections were also raised to 1.9%, more than the 1.2% projected in March.

ECB President also hinted at increased emergency purchases over the next quarter “at a significantly higher pace than during the first months of the year” but did not provide further detail.

Banking stocks advanced 0.4% and tech stocks added 0.9% while travel and leisure stocks fell 1.2% after recent gains.

In Germany, the DAX finished flat, the CAC in France shed 0.26%, while the UK’s FTSE ended up by 0.10%

In Asia, stocks were steady following a rally in U.S. shares and Treasuries as investors expected a spike in inflation to be transitory, leaving scope for ongoing central-bank support.

In Australia, the ASX dropped 0.22% while Kospi in South Korea rose 0.50%, and Japan’s Nikkei was flat.

This article is for information purposes only.
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