(Bloomberg) — U.S. stocks were volatile while Treasuries continued to rise as the latest inflation data didn’t do enough to change expectations about Federal Reserve policy.
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The S&P 500 struggled for direction. The Nasdaq 100 has been dragged down by Nvidia stock, and yields continue to fall across the curve, with 10-year rates currently sitting at about 3.74%. The dollar is headed for its fourth consecutive week of decline.
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The Fed’s recommended measure of underlying U.S. inflation rose slightly in August, and inflation-adjusted consumer spending rose as well. These figures underscore the weakening economy and strengthen expectations that the U.S. central bank will continue to cut interest rates.
Traders were also taking stock of U.S. consumer sentiment on Friday, with the measure hitting a five-month high after the Federal Reserve lowered borrowing costs.
Given this statistic, markets are still pricing in a rate cut of between a quarter of a point and a half of a percentage point at the next Fed meeting. Economists now expect inflation to reach the U.S. central bank’s target of 2% next year.
“Add today’s PCE price index to the list of economic data that has performed well,” said Chris Larkin, managing director of trading and investments at E*Trade. “Inflation remains low and economic growth may be slowing, but there are no signs of falling off a cliff.”
Damian McIntyre, portfolio manager at Federated Hermes, said while a soft economic landing is never guaranteed, investors should find solace in the strength of recent economic indicators.
“Today’s article on inflation confirms what Jerome Powell told us last week: Inflation is falling, consumers are doing well, and the labor market remains resilient. ” he said.
This week, China’s daily stimulus announcements also stimulated risk appetite across the market. On Friday, Israel announced an attack on Hezbollah’s headquarters in southern Beirut, as geopolitical tensions continue to rise.
Japan’s yen rebounded after Shigeru Ishiba won the ruling party leadership election. Ishiba is a party veteran who has held several key positions, including defense minister, and is seen as supporting the Bank of Japan’s plan to raise interest rates in stages.
In China, the CSI 300 index ended its best week since 2008. The People’s Bank of China has launched its boldest policy campaign in decades, with the Chinese government rolling out a powerful stimulus package to shore up the slowing economy and investors. Confidence.
the story continues
The main movements in the market are:
stock
The S&P 500 was little changed as of 12:41 p.m. New York time.
Nasdaq 100 fell 0.4%
The Dow Jones Industrial Average rose 0.6%.
MSCI World Index rose 0.2%
currency
Bloomberg Dollar Spot Index little changed
The euro fell 0.3% to $1.1147.
The British pound fell 0.3% to $1.3381.
The Japanese yen rose 1.6% to 142.48 yen to the dollar.
cryptocurrency
Bitcoin rises 2.4% to $66,256.88
Ether rose 3.3% to $2,719.57.
bond
The 10-year Treasury yield fell 5 basis points to 3.74%.
Germany’s 10-year bond yield fell 5 basis points to 2.13%.
The UK 10-year bond yield fell 3 basis points to 3.98%.
merchandise
West Texas Intermediate crude rose 0.6% to $68.09 a barrel.
Spot gold fell 0.7% to $2,653.48 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Winnie Hsu, Divya Patil, Alex Nicholson, Sujata Rao, Margaryta Kirakosian, and Edward Bolingbroke.
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