Global Stock Index Falls, Yields Rise with Inflation Data in Focus

Global Stock Index Falls, Yields Rise with Inflation Data in Focus
Global Stock Index Falls, Yields Rise with Inflation Data in Focus

The global stock index fell slightly on Tuesday, while U.S. Treasury yields rose to multi-week highs as investors cautiously awaited inflation data due later in the week, hoping to obtain clues on the outlook for changes in American interest rates.

U.S. Treasury yields gained ground after a weak auction. They had risen earlier after data showed U.S. consumer confidence unexpectedly improved in May, amid optimism in the labor market, after deteriorating for three straight months.

Additionally, U.S. housing price growth slowed sharply in March, likely because rising mortgage rates weighed on demand.

Stock investors were mostly focused on waiting for price data, which is not due until Friday. The Federal Reserve’s preferred inflation barometer, the U.S. Personal Consumer Expenditures Price Index, is expected to remain stable on a monthly basis for the month of April.

“This is a shortened holiday week, so volume is expected to be quite low throughout the week. This is coupled with markets focusing on a key piece of data that will be released on Friday,” said Gene Goldman, chief investment officer at Cetera Investment Management in El Segundo, California, referring to the Memorial Day holiday in the United States.

“The market is eagerly awaiting confirmation that inflation is moving closer to the Fed’s target,” Goldman said.

The MSCI world stock index lost 1.28 points, or 0.16%, to 792.07.

Nevertheless, on Wall Street, the Nasdaq managed to surpass the 17,000 level and close above it for the first time, while Nvidia, the leader in artificial intelligence, reached an all-time high.

The Dow Jones Industrial Average lost 216.73 points, or 0.55%, to 38,852.86, the S&P 500 gained 1.32 points, or 0.02%, to 5,306.04 and the Nasdaq Composite gained 99.09 points, or 0.59%, to 17,019.88.

Earlier, the European STOXX 600 index closed down 0.6%.

Investors also digested economic data, which fueled uncertainty over the Fed’s monetary policy outlook.

“With $297 billion in nominal supply Tuesday between coupons and bonds, I think we should expect some indigestion,” said Tom Simons, U.S. economist at Jefferies in New York.

The benchmark 10-year U.S. bond yield rose 6.7 basis points to 4.54%, from 4.473% late Friday, while the 30-year bond yield rose 7.9 basis points to 4.656%. The 2-year bond yield, which moves based on interest rate forecasts, rose 2.1 basis points to 4.9742%.

Turning to currencies, the dollar index gave up its earlier losses due to rising Treasury yields and managed to gain ground slightly.

“The bond market turned around (Tuesday) and the dollar with it,” said Adam Button, chief currency analyst at ForexLive in Toronto, citing weak auctions and noting that the improving bond sentiment report consumers reflects “stronger growth”.

The index, which measures the greenback against a basket of currencies including the yen and the euro, gained 0.04 percent to 104.60, with the euro unchanged at $1.0858.

Against the Japanese yen, the dollar strengthened by 0.18% to 157.14.

Oil prices gained more than a dollar a barrel on expectations that OPEC+ will maintain crude supply curbs at its June 2 meeting as the summer driving season begins in the United States and a weaker dollar also boosted the commodity.

U.S. crude oil futures settled at $79.83 a barrel, up 2.71%, while Brent crude settled at $84.22, up 1.35%.

The price of gold rose slightly, with spot gold gaining 0.33% to $2,358.58 per ounce. U.S. gold futures gained 1.17% to $2,359.70 an ounce.

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