By Chibuike Oguh
NEW YORK (Reuters) – Global equity markets rose while U.S. Treasury yields fell on Friday as investors tempered their expectations on the scale of the Federal Reserve’s interest rate raising cycle amid a pullback in inflation led by falling oil prices.
Market sentiments have been buoyed by U.S. Labor Department data this week showing a slowdown in consumer and producer prices in July following a series of interest rate hikes by the Fed.
“With inflation now backing off, all the managers who stayed in cash and didn’t believe we could move off the June lows are now being forced in back in to the market,” said Thomas Hayes, chairman at Great Hill Capital.
The MSCI world equity index, which tracks shares in 50 countries, was up 0.25%. The pan-European index gained 0.10%.
U.S. Treasury yields were down as traders weighed a likely moderation of the Fed’s monetary policy stance amid falling prices. Benchmark 10-year note yields dipped to 2.8585%, after reaching 2.902% on Thursday, the highest since July 22.
“With inflation coming down, consumer confidence is going to be coming back, and employment is still strong, you could see a situation where the market has stabilized and the economic numbers continue to slow based on the lag effect of the Fed tightening that has already happened,” Hayes added.
All three main Wall Street indexes were trading higher, led by stocks in technology, healthcare, communication services, consumer discretionary and financials.
The rose 0.31% to 33,441.09, the gained 0.60% to 4,232.34 and the added 0.88% to 12,892.77.
Oil prices dipped as recession fears clouded the demand outlook, even as crude remained on track for a weekly gain. futures were down 1.75% at $97.88 a barrel while U.S. West Texas Intermediate (WTI) crude fell 2.44% to $92.04.