© Reuters. FILE PHOTO: An electronic screen displaying Japan’s Nikkei share average and stock prices is seen through a car as the share average hits a record high in Tokyo, Japan February 26, 2024. REUTERS/Issei Kato/File Photo
By Chuck Mikolajczak
NEW YORK (Reuters) -A gauge of global stocks and U.S. Treasury yields rose modestly on Wednesday, as investors looked to the next round of data on inflation and consumer health for clues on the direction of Federal Reserve policy.
Stocks in Europe and the on Tuesday marked record closing highs, shaking off a slightly hotter-than-expected reading on U.S. consumer inflation (CPI), with the S&P 500 also getting a lift from a surge in shares of Oracle (NYSE:) after its quarterly earnings.
The inflation data did little to alter expectations that the Federal Reserve will cut interest rates by at least 25 basis points (bps) at its June meeting but gave a boost to U.S. Treasury yields, a trend which continued on Wednesday.
“This has been the dynamic since December – the battle between market expectations of what the Fed is going to do and the Fed’s expectations of themselves,” said Jack McIntyre, portfolio manager for global fixed income at Brandywine Global.
Investors will get another round of inflation data in the form of the U.S. producer price index (PPI) on Thursday, along with data on consumer spending and the labor market, before next week’s Fed policy meeting.
On Wall Street, the rise in yields weighed on tech stocks and pulled the lower. The rose 115.44 points, or 0.30%, to 39,120.73, the S&P 500 lost 1.52 points, or 0.03%, to 5,173.75, and the lost 53.25 points, or 0.33%, to 16,212.29.
Yields continued their climb after the CPI data with the benchmark U.S. 10-year notes up 2.7 bps to 4.182%, from 4.155%, and on track for a third straight session of advances, which would mark the longest run in just over a month.
The 2-year note yield, which typically moves in step with interest-rate expectations, rose 1.2 bps to 4.6114% and was also poised for a third straight gain.
MSCI’s gauge of stocks across the globe rose 0.78 points, or 0.10%, to 776.49, after climbing within 0.15% of a record.
The index rose 0.16% adding to its record level, aided by retail stocks, while Europe’s broad index rose 3.83 points, or 0.19%
{{2126|The do fell 0.21% at 102.70, with the euro up 0.3% at $1.0957 after the result of the long-awaited Operational Framework Review showed the European Central Bank wants to wean banks off free cash but will try to do so gently enough not to upset the financial system or lending.
Against the Japanese yen, the dollar weakened 0.03% at 147.6, while sterling strengthened 0.12% to $1.281.
In cryptocurrencies, bitcoin gained 2.62% at $72,930.70 after climbing to its third straight record at $73,678.
gained 2.41% to $79.43 a barrel and rose to $83.81 per barrel, up 2.31% on the day, supported by a drop in U.S. crude inventories as well as a bigger-than-expected drop in U.S. gasoline stocks and potential supply disruptions after Ukrainian attacks on Russian refineries.
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