Bond yields fall on bets U.S. Fed nearing end of hikes

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 per cent. The dollar slipped to a 15-month low. Brent crude climbed above US$80 a barrel for the first time since May.

The consumer price index rose 3 per cent in June from a year ago. The core measure — which economists view as the better indicator of underlying inflation — advanced 4.8 per cent, 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.”