Stocks Rally as Treasury Yields Retreat From 3%

Asian stocks rallied after gains in their U.S. counterparts amid relief the latest reading on American inflation suggested less need for the Federal Reserve to accelerate monetary tightening. The dollar steadied and 10-year Treasury yields held below 3 percent.

The MSCI Asia Pacific Index is heading for its best week since February thanks to easing investor concerns that higher U.S. yields and a stronger dollar would spur broad contagion. Equity benchmarks advanced across most of the region, with Japan’s Topix closing at a three-month high. Malaysian assets trading offshore began to stabilize after the shock election win for the opposition. The pound steadied after Thursday’s declines, spurred by a less-hawkish tone from the Bank of England policy meeting.

Investors took solace in U.S. consumer price data that rose less than forecast, and showed costs for big-ticket items such as automobiles and airfares declined last month. A gauge of American small-cap stocks set a record.

“The market is breathing a sigh of relief that there was not an upside surprise to the inflation stats,” Peter Boockvar, the chief investment officer of Bleakley Financial Group, wrote in an email to clients.

Geopolitics remained in focus, with the summit between U.S. President Donald Trump and North Korea’s Kim Jong Un set for June 12 in Singapore. Oil is heading for a second week of gains after Trump pulled out of the Iran nuclear deal, and held just above the $71 a barrel.

As the week draws to a close, here’s a look at some potential focal points for investors:

The University of Michigan gauge of consumer sentiment is due.

And these are the main moves in markets:

Stocks

The MSCI Asia Pacific Index jumped 0.9 percent as of 3:22 p.m. Tokyo time.

Topix index climbed 1 percent to highest level since Feb. 5.

Hong Kong’s Hang Seng Index rose 1.2 percent.

Kospi index rose 0.5 percent.

Futures on the S&P 500 Index were unchanged.

Currencies

The Bloomberg Dollar Spot Index rose less than 0.05 percent.

The Japanese yen fell 0.1 percent to 109.46 per dollar.

The euro fell 0.1 percent to $1.1909.

Bonds

The yield on 10-year Treasuries was unchanged at 2.96 percent.

Japan’s 10-year yield dipped one basis point to 0.048 percent.

Australia’s 10-year yield rose one basis point to 2.79 percent.

Commodities

West Texas Intermediate crude fell 0.1 percent to $71.29 a barrel.

Gold fell 0.1 percent to $1,319.79 an ounce.

Source: Bloomberg

LME copper fell 0.2 percent to $6,905.50 per metric ton.