Slowing Inflation Pushes S&P 500 to Record Highs
Consumer Price Index Slows for the First Time in 6 Months
Topic
Impacts on the Dollar Gold and Oil
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Wall Street experienced a wave of optimism after the release of April inflation data,
which bolstered expectations that the Federal Reserve would cut interest rates.
This optimism led U.S. stock indices to reach record levels, while bond yields declined.
The “S&P 500” (S&P 500) index reached an all-time high,
surpassing the 5300-point mark, as the data showed that the Consumer Price Index slowed
for the first time in six months. The “VIX” index, known as the fear gauge on Wall Street,
fell to its lowest level since December.
Treasury bonds rose across all maturities amid expectations that
the Federal Reserve would cut interest rates this year.
Inflation
Slowing Inflation in the United States
The Consumer Price Index rose by 0.3% in April on a monthly basis, slightly below expectations.
Meanwhile, the core Consumer Price Index, which excludes food and energy,
matched the forecasted increase of 0.3%.
This represents the smallest monthly increase for the core Consumer Price Index so far this year.
Inflation Report
Top 5 Takeaways from the April Inflation Report
Traders increased their bets on a Federal Reserve rate cut following the release of the April Consumer Price Index report. Interest rate swaps now indicate an over 85% probability of a quarter-point rate cut by the Fed’s September meeting.
Ten-year bond yields fell by 10 basis points to 4.34% on Wednesday,
marking their lowest level in over a month, before trimming some of those gains.
Impacts on the Dollar Gold and Oil
The dollar declined against all major currencies in advanced markets,
with rising expectations of a Federal Reserve rate cut. In contrast,
the Japanese yen surged by over 1% to 154.70 against the dollar in New York trading on Wednesday,
amid signs of easing inflationary pressures in the United States.
Gold prices rose to their highest level in over three weeks after the release of the data,
with its spot price reaching $2,388.06 per ounce at the time of the report, up 1.38%.
Oil prices also benefited from the weakening dollar and increased risk appetite in the markets,
with West Texas Intermediate crude for June delivery rising by 61 cents to settle at $78.63 per barrel in New York.
Slowing Inflation Pushes S&P 500 to Record Highs