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Bond yields slump on bets fed nearing end of hikes

A pedestrian walks along a footbridge near the Oriental Pearl Tower in Pudong's Lujiazui financial district in Shanghai, China, on June 21.   (Raul Ariano/Bloomberg)
By Rita Nazareth Bloomberg

Treasury yields fell and stocks rose as data showing a slowdown in inflation bolstered speculation the Federal Reserve is close to ending its rate hikes.

The S&P 500 finished at its highest since April 2022, while the Nasdaq 100 outperformed. Two-year yields, which are more sensitive to imminent policy moves, slid 13 basis points to around 4.75%. The dollar slipped to a 15-month low. Brent crude climbed above $80 a barrel for the first time since May.

The consumer price index rose 3% in June from a year ago. The core measure - which economists view as the better indicator of underlying inflation - advanced 4.8%, the lowest since 2021 - still well above the Fed’s target.

“It’s too early to pop the champagne, but it’s not too early to start chilling the bottle,” said Ronald Temple, chief market strategist at Lazard. “Better-than-expected data increases the likelihood that a Fed rate increase on July 26 will be the last of this cycle.”

In corporate news, Meta Platforms and Nvidia led gains in megacaps. Domino’s Pizza jumped on a third-party ordering agreement with Uber Technologies. Microsoft is set for a second shot at winning U.K. approval for its takeover of Activision Blizzard, but regulators warn that any antitrust fixes would trigger a new probe.