U.S. stocks, bonds rally in relief on inflation data

U.S. stocks jumped and Treasuries rallied after data showed inflation slowing last month, fueling bets the Federal Reserve will only have to raise rates one more time this year.

The S&P 500 climbed as much as 0.6 per cent as the Nasdaq 100 advanced 0.8 per cent. Two-year Treasury yields tumbled more than 10 basis points, while the dollar fell against a basket of G-10 peers. Swaps markets showed the odds for a Fed rate hike in May moderated to closer to a two-in-three chance while trading continued to imply the central bank will cut later this year.

U.S. consumer prices rose 0.1 per cent in March, just below economists' forecast of 0.2 per cent and was up 5 per cent from a year earlier. The closely watched core CPI number — which excludes food and energy — increased 0.4 per cent, meeting the median estimate of 0.4 per cent. 

For Fed officials juggling the need to curb rampant inflation and stabilize wobbly banks, it's a delicate balancing act.