Stock Street stocks soared and U.S. government bonds were released on Friday as traders reviewed indications that the US inflation rate hikes last month to a record high for almost 40 years.
The blue-chip index S&P 500 gained 0.7% while the Nasdaq Composite technical firm rose 0.8%.
The Department of Labor says U.S. consumer prices rose 6.8 percent in November from the same month in 2020, the highest interest rate since June 1982 and forecasts for economists. The decline in last month’s prices was 6.2 percent.
Yields over the two-year US Treasury note, which are consistent with the value of government debt and strictly adhere to monetary policy expectations, were stable at 0.68 percent.
“The market expected inflation and inflation rates to decline in the market for several months now,” said George Ball, chairman of the Sanders Morris Harris finance group.
Many retailers also expect inflation to increase in the near future, due to the online crisis – caused by the decline in coronaviruses and the resurgence of electronic markets from the recession 2020 -.
“The mortgage market tells us that inflation is not going to last long,” said Guillaume Paillat, general manager of Aviva Investors.
Yields on the benchmark 10-year Treasury note were stable at 1.48 percent after inflation data. Five-year five-year inflation rate, a measure of long-term inflation expectations, was also below 2.5 percent.
Fed Chairman Jay Powell has presented a a strong signal that the U.S. central bank, which will hold its next financial summit next week, could dramatically lower $ 120bn-month bond purchases that have reduced lending rates and boosted market sentiment during the epidemic.
This could be completed by March, launching the world’s largest bank raising interest rates Since their current decline, leading financial analysts interviewed by the Financial Times have said so.
“The US economy is in a good position,” said Paul Jackson, chief investment officer at fund manager Invesco. “If the Fed does not withdraw its support here and start changing its monetary policy, they will have fewer bullets when we get into trouble.”
Christophe Donay, head of distribution at Pictet, predicted that the US central bank would change any trend if a new type of Omicron coronavirus or other future epidemics began to impede economic growth.
“We anticipate a 4 per cent inflation rate next year,” he said.
“When the risks rise, the markets see the Fed weakening its resilience.”
In Asia, Hong Kong’s Hong Kong index fell by 1.1%, with glasses falling on Wall Street in the previous quarter. The Nikkei 225 in Tokyo closed 1 percent down. The outgoing FTSE market index fell 0.6 percent.
In currency, the dollar index, which controls how the US currency is operating against six others, was flat. Sterling was firm against the dollar, buying only $ 1.32.
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