Markets Update: Inflation Concerns Ease, Boosting Stocks and Bonds

US stocks experienced a lift on the final trading day of the quarter. This upward movement was further propelled as Treasury yields dipped, following a more subdued inflation rate revealed by the Federal Reserve’s favored metric.

Specifically, the S&P 500 surged by 0.7%, and the Nasdaq 100 saw a 1% increment. Two-year Treasury yields, which often respond swiftly to anticipated policy shifts, descended to 5.02%. Concurrently, the dollar declined.

August data showed the core personal consumption expenditures price index, after removing the fluctuations of food and energy costs, went up by only 0.1%, not reaching economist expectations. Market players are now keenly observing for indications that inflation is stabilizing, hoping the central bank might consider relaxing its stringent rate policies. Recent global high rates have been suppressing stock growth. The third quarter of the year marked the most challenging period for MSCI’s global index since September 2022, primarily due to rocketing oil prices stirring concerns about inflation and overall economic progression.

This Week’s Highlights:

• Announcements expected on US consumer spending, wholesale stock levels, and University of Michigan’s consumer sentiment on Friday.
• Talks from ECB President Christine Lagarde and New York Fed President John Williams scheduled for Friday.

Snapshot of Market Movements:

Stocks:

• By 9:30 a.m. in New York: S&P 500 up 0.8%, Nasdaq 100 up 1%, Dow Jones up 0.6%, Stoxx Europe 600 up 1.2%, and MSCI World index up 0.8%.

Currencies:

• Bloomberg Dollar Spot Index dropped by 0.3%. Euro climbed 0.2% standing at $1.0588. The British pound rose by 0.3% to $1.2240, while the Japanese yen remained stable at 149.22 per dollar.

Cryptocurrencies:

• Bitcoin decreased by 0.3% to a value of $27,004.09, whereas Ether grew by 1%, reaching $1,673.09.

Bonds:

• 10-year Treasury yields in the US fell by six basis points, resting at 4.52%. Germany’s equivalent dropped by 10 basis points to 2.83%, and Britain’s declined by five basis points, stabilizing at 4.43%.

Commodities:

• West Texas Intermediate crude oil increased by 0.4%, priced at $92.11 a barrel. Meanwhile, gold futures went up by 0.8% to a price of $1,894.30 an ounce.