NEW YORK, USA - MARCH 25: Tourists that lined up for take a photo of the Charging Bull are seen during COVID-19 pandemic in New York City, United States on March 25, 2021. (Photo by Tayfun Coskun/Anadolu Agency via Getty Images)

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S&P 500 futures hovered near a record high on Friday after data showed that US inflation surged more than expected in May, but weekly jobless claims fell to a pandemic-era low.

Bond yields fell back to their lowest level since March, in a sign that the market believes strong inflation will prove transitory, as the Federal Reserve has long argued.

S&P 500 futures rose 0.06% on Friday morning in Europe to trade at around a record high. The underlying index scaled new heights a day earlier, rising 0.47%.

Dow Jones futures rose 0.12% after the index eked out a small gain on Thursday. Nasdaq 100 futures were roughly flat, following a 1.05% jump for the index a day earlier.

US consumer price index inflation surged 5% year on year in May, figures released on Thursday showed, higher than the 4.7% rise economists were expecting. Inflation rose 0.6% from April to May, however, lower than the 0.8% jump from March to April.

In a reversal of recent trends, bond yields fell and helped push stocks higher as investors appeared to shrug off the surge in prices.

“Those fearing a new inflationary era are rubbing their eyes this morning as the hottest US core CPI print in decades saw US Treasuries first sell-off, only to rally and see yields close at new lows for the recent cycle,” Steen Jakobsen, chief investment officer at Saxo Bank, said.

US bond yields, which move inversely to prices, continued to fall in Europe. The yield on the key 10-year US Treasury note fell 2.2 basis points to 1.437%, its lowest since early March.

The fall in bond yields is a sign that many investors think hot inflation will be a passing phase. Yields tend to rise along with inflation expectations, as buyers demand a stronger return …read more

Source:: Business Insider


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