By Andrew Galbraith
SHANGHAI (Reuters) – US bond yields fell to three-month lows and a broad gauge of Asian stocks rose on Friday as investors saw enough unique factors in US consumer price data to support the Federal Reserve’s belief that rising inflation will be transitory.
Some economists say that the rise in the CPI reflected short-term adjustments related to the reopening of the economy, and many investors seem confident that the Fed is skillfully handling a rebound in economic growth, even when questions remain about how it defines “transitory.”
Overnight data showed that the US consumer price index posted its biggest year-over-year increase of 5% since August 2008, following a 4.2% increase in April. However, there were significant contributions from short-term increases in airfare and used car prices, raising some questions about underlying inflationary pressures.
At the same time, data from the US Department of Labor also showed the lowest level of new claims for unemployment benefits in nearly 15 months last week.
In morning trading in Asia, MSCI’s broader Asia-Pacific equity index outside of Japan was up 0.18%. it gave up early earnings to drop 0.11%.
“Last night’s printing is just one in a long series of evidence that inflation is not just rising, but more than transitory base effects,” said Rob Carnell, chief Asia-Pacific economist at ING in Singapore.
“But the Fed, which meets next week, can still point out that there is no deviation from inflation expectations to support its continued mantra of transitory inflation. The market is buying that for now.”
Seoul’s Kospi was up 0.32%, Australia’s shares were up 0.14% and Hong Kong’s were up 0.53%. China’s first-class shares fell more than 1% as consumer staples companies pulled out after two days of gains.
China’s broad credit growth continued to slow in May as the country’s central bank seeks to contain rising debt in the world’s second-largest economy.
“Due to very strong external demand, the negative impact of the credit slowdown should be acceptable in the next three to six months, mainly thanks to strong demand from the United States,” said Larry Hu, an economist at Macquarie in Hong Kong.
“(But) once US demand is back to normal, I think the Chinese economy is going to feel more pain from the credit tightening.”
On Thursday, US stocks rose to all-time highs, gaining 0.47% to an all-time high of 4,239.18. He was up 0.06% and the added one 0.78%.
The yield on the 10-year US Treasury note fell to a three-month low of 1.4340%, down from Thursday’s close of 1.459%. The 30-year yield was 2.1270%, its lowest level since February 26.
The spread between the 2- and 10-year yield also reached its narrowest level since late February, as inflation expectations declined.
The dollar fell as yields fell, with the dollar index shedding 0.06% to 90.018. The euro gained 0.12% to $ 1.2183, but the Japanese yen weakened to 109.40 to the dollar.
Hopes for strong economic demand following the US jobless claims report pushed oil prices to two-year highs on Thursday. In Asia trade, the global benchmark last stood at $ 72.36 per barrel, down 0.22% on the day, and US West Texas Intermediate crude was down 0. , 26% at $ 70.11 per barrel.
it rose 0.07% to $ 1,899.39 an ounce on a weaker dollar. [GOL/]