(Bloomberg) — U.S. equities climbed and government bonds fell after data showed that consumer prices rose more than forecast last month, stoking concern that inflation may prompt the Federal Reserve to reign in its ultra-accomodative policies.
The S&P 500 was trading around all-time highs for a fourth straight session. The 10-year Treasury yield spiked above 1.5%, pausing a rally that took the benchmark to the lowest since March on Wednesday.
Prices paid by U.S. consumers rose in May at the fastest pace since 2009, extending a buildup in inflation that risks becoming overheated as the economy strengthens, Labor Department data show. The consumer price index report comes after rangebound trading in equities and falling yields have characterized the start of June as investors awaited some impetus from progress reports on the global economic recovery. A frenzy in meme stocks and gyrations in cryptocurrencies are among the few sources of pronounced market volatility.
“The hot print on inflation has to be getting the Fed’s attention,” said Cliff Hodge, chief investment officer at Cornerstone Wealth. “It will still likely be chalked up to transitory base effects, but the CPI print alongside recent releases on higher wages will only turn up the volume on taper talk.”
GameStop Corp. shares fell after the company said it planned to offer more shares and disclosed that regulators are investigating trading of its stock. Other retail trader favorites were mixed, with some of the stocks that surged amid the frenzy on Wednesday giving back gains.
Commodities, one of the leading reflation plays, continued to stall, with the Bloomberg Commodity Index leveling off around the highest since 2015. Oil erased an earlier loss triggered by fears of oversupply. Bitcoin held an advance.
For market commentary, follow the MLIV blog.
Here are key events to watch this week:
Group of Seven leaders’ summit starts in Cornwall, England Friday.
These are some of the main moves in markets:
Stocks
The S&P 500 rose 0.4% as of 9:32 a.m. New York timeThe Nasdaq 100 was little changedThe Dow Jones Industrial Average rose 0.6%The Stoxx Europe 600 rose 0.2%The MSCI World index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index rose 0.1%The euro fell 0.3% to $1.2148The British pound was little changed at $1.4126The Japanese yen fell 0.1% to 109.79 per dollar
Bonds
The yield on 10-year Treasuries advanced three basis points to 1.52%Germany’s 10-year yield advanced one basis point to -0.23%Britain’s 10-year yield advanced four basis points to 0.77%
Commodities
West Texas Intermediate crude rose 0.5% to $70 a barrelGold futures were little changed
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