World stocks, bonds rise after US inflation data
Saturday, May 31, 2008
SAFE-HAVEN government bond prices regained poise yesterday after this week's tumble and world stocks hit one-week highs as US data showed a rise in personal consumption and moderation in a key measure of inflation.
Data on the core Personal Consumption Expenditure index the Federal Reserve's favourite measure of inflation rose 0.1 per cent as expected in April, compared with 0.2 per cent in the previous month. US personal spending rose 0.2 per cent.
This has eased concerns about inflation, which triggered a global rout on government bonds in major economies on Thursday.
Euro zone government borrowing costs had surged to their highest since the credit crisis erupted in August, while better-than-expected economic data had sent benchmark Treasury yields to a five-month high as investors priced in a chance of an rate hike this year.
Scott Brown, chief economist at Raymond James & Associates in St Petersburg, Florida said: "The inflation data is pretty mild... The numbers were not quite as bad as they could have been."
"Core PCE is important because the Fed is still looking for evidence that higher food and energy prices are feeding through to core inflation and consumer level. There is not that much evidence yet."
The FTSEurofirst 300 index rose 0.7 per cent while MSCI main world equity index gained 0.3 per cent to a one-week high.
Asian stocks rose yesterday, led by exporters in Japan.
The US dollar steadied near three-month highs against the yen after US economic growth figures were revised upwards overnight.
The weaker yen helped to boost export stocks with good brand recognition in overseas markets like Canon Inc, Sony Corp and Toyota Motor Corp, pushing Japan's Nikkei share average up 1.5 per cent to a four-month closing high.
A report released yesterday showed consumer inflation eased in April, though analysts expected price pressures to pick up in May.
In the euro zone, inflation surged back to a record 3.6 per cent in May, reinforcing the view that rising price pressures from costly oil would prompt the European Central Bank to hike interest rates.
Goldman Sachs reckons food and energy are now adding on average 1.9 basis points percentage point to headline inflation in the United States, the euro zone and Britain, up from half a point a year ago.Reuters
Data on the core Personal Consumption Expenditure index the Federal Reserve's favourite measure of inflation rose 0.1 per cent as expected in April, compared with 0.2 per cent in the previous month. US personal spending rose 0.2 per cent.
This has eased concerns about inflation, which triggered a global rout on government bonds in major economies on Thursday.
Euro zone government borrowing costs had surged to their highest since the credit crisis erupted in August, while better-than-expected economic data had sent benchmark Treasury yields to a five-month high as investors priced in a chance of an rate hike this year.
Scott Brown, chief economist at Raymond James & Associates in St Petersburg, Florida said: "The inflation data is pretty mild... The numbers were not quite as bad as they could have been."
"Core PCE is important because the Fed is still looking for evidence that higher food and energy prices are feeding through to core inflation and consumer level. There is not that much evidence yet."
The FTSEurofirst 300 index rose 0.7 per cent while MSCI main world equity index gained 0.3 per cent to a one-week high.
Asian stocks rose yesterday, led by exporters in Japan.
The US dollar steadied near three-month highs against the yen after US economic growth figures were revised upwards overnight.
The weaker yen helped to boost export stocks with good brand recognition in overseas markets like Canon Inc, Sony Corp and Toyota Motor Corp, pushing Japan's Nikkei share average up 1.5 per cent to a four-month closing high.
A report released yesterday showed consumer inflation eased in April, though analysts expected price pressures to pick up in May.
In the euro zone, inflation surged back to a record 3.6 per cent in May, reinforcing the view that rising price pressures from costly oil would prompt the European Central Bank to hike interest rates.
Goldman Sachs reckons food and energy are now adding on average 1.9 basis points percentage point to headline inflation in the United States, the euro zone and Britain, up from half a point a year ago.Reuters
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