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* Pan-European MSCI ACWI, S&P 500 hit record highs
* ECB supports stimulus at last meeting
* Estimated Treasury yields hit 3-month low
NEW YORK, Jun 10 (Reuters) – Global stocks surged to new highs and bond yields plunged on Thursday after a surge in US inflation was deemed insufficient to change the Fed’s loose monetary policy that saw consumer growth prices will be temporary.
The MSCI global benchmark, the S&P 500 and the pan-European stock index rose sharply after the US Labor Department reported that the consumer price index for the 12 months ended May increased by 5.0%, the largest increase year-on-year since August 2008.
The report was largely in line with expectations, said Subadra Rajappa, head of US betting strategy at Societe Generale in New York.
“The market really believes in the narrative that the rise in inflation is actually temporary, because you don’t see that it necessarily raises concerns in the bond market,” Rajappa said.
The yield on 10-year US Treasuries fell to a three-month low of 1.460%. When investors were worried about inflation in March, the yield rose to 1.776%.
Many now believe that economic growth will slow and that any acceleration in inflation will be temporary, said Joseph LaVorgna, chief economist for the Americas at Natixis in New York.
“The (stock) market will ignore the data. In any case, he will rally, ”said LaVorna.
“If the economy turns out to be weaker than people think in the next three to six months, it won’t even matter if inflation continues to rise unexpectedly,” he said.
The MSCI World Index by Country rose 0.45% to 718.81, surpassing its previous record set on Tuesday. The pan-European STOXX 600 rallied to a fresh high and then closed slightly higher at 454.56. The European Central Bank raised its forecast for economic recovery and promised to continue stimulating the economy.
On Wall Street, the Dow Jones Industrial Average is up 0.26%, the S&P 500 is up 0.55%, beating its previous record, and the Nasdaq Composite is up 0.81%, boosted by stocks that thrive at low interest rates. rates.
Despite rising wages, prices for most non-energy commodities fell as prices for lumber, grain and meat declined, according to Thomas Hayes, chairman and managing member of Great Hill Capital LLC.
“The rate of change in inflation has made people very worried, especially with regard to the commodity basket. “Mitigation” makes people more at ease, ”Hayes said. “Given that the 10-year period hardly ends with this news, I tend to start investing in work.”
Surprisingly high US inflation in April alarmed investors, prompting caution ahead of Thursday’s May data. Still, risky assets remained afloat as central bankers on both sides of the Atlantic signaled their willingness to keep the money taps open until the recovery resumes.
The ECB said it will buy bonds “at a significantly faster pace” than at the beginning of this year, reiterating its March pledge, as most central bank observers expected.
In the United States, according to the data, the number of people applying for new unemployment benefits fell last week to its lowest level in nearly 15 months.
The dollar index fell 0.071%, the euro – 0.07% to $ 1.217. The Japanese yen gained 0.19% against the dollar at 109.42 per dollar.
Oil prices climbed to their highest level in more than two years amid volatile trade amid optimism about strong economic demand after new US jobless claims plunged to their lowest level since the first wave of COVID-19 in country last year.
Brent crude futures are up 30 cents to $ 72.52 a barrel by 1:24 pm ET (17:00 GMT), while WTI crude is up 33 cents to $ 70.29 a barrel …
US gold futures closed at 1896.40 an ounce.
Reporting by Herbert Lasch, additional reporting by Simon Jessup in London, Swati Pandey in Sydney, Tiago Adinarayan in London; Editing: Angus McSwan, Catherine Evans, Jane Merriman and David Gregorio.