On Wednesday, global stock prices hovered at all-time highs, while US bond yields fell to their lowest levels in a month, as investors bet the Federal Reserve will take a long time to reduce its economic stimulus.
The focus is on Thursday’s release of US consumer pricing data and a European Central Bank meeting for more hints about when officials would begin to withdraw support for Europe’s economy, which was handed out in the aftermath of the COVID-19 crisis.
MSCI’s all-country world index recently stood at 716.42, up from an intraday high of 718.19 on Tuesday, with advances in Europe leading the way.
“As a result, those who bet on the yield curve steepening are unwinding their holdings, while some investors are now purchasing to earn carry.”
Despite mounting evidence of a labor shortage, U.S. payroll statistics released last Friday showed hiring did not expand as quickly as economists had predicted.
Many economists believe the Federal Reserve would need further evidence of solid employment growth before considering tapering.
The Federal Reserve of the United States has stated that any increases in inflation this quarter will be temporary and will not jeopardize price stability, which is one of the central bank’s major missions.
On the back of rising commodity prices, China’s producer price index surged 9.0 percent from a year ago, the largest in over 12 years.
Consumer prices, on the other hand, rose more slowly than projected, easing concerns. While China’s central bank is gradually reducing pandemic-related stimulus, the country’s senior officials have pledged to prevent any abrupt policy changes and keep borrowing prices low.
The Chinese yuan increased marginally to 6.3945 per dollar, after rallying to a three-year high last week, fueled in part by speculation Beijing may prefer a stronger yuan to combat inflationary pressure.
Greece followed Italy with a bond offering, opening books on Wednesday for a 10-year issuance, as European bond markets remained tranquil.
Oil prices remained stable after US Secretary of State Antony Blinken stated that even if the US and Iran negotiate a nuclear deal, hundreds of US sanctions on Tehran would remain in place.
On Tuesday, oil futures in the United States closed above $70 a barrel for the first time since October 2018, and were last trading at $70.40, up 0.5 percent.
Brent futures climbed 0.5 percent to $72.56, after reaching their highest level since May 20, 2019.