# Stocks climb, yields fall with dollar on inflation data
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-08-10
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Wall Street Rallies as Treasury Yields Plunge on
Meta Description: Tumbling Treasury yields and a weakening dollar signal bets of a slower Fed rate hike. Analysts cautious but optimistic about economy's future prospects.
URL: https://financedigest.com/stocks-climb-yields-fall-with-dollar-on-inflation-datahtml

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By Sinéad Carew

NEW YORK (Reuters) – Wall Street equities rallied and Treasury yields plunged after signs of sharply decelerating U.S. [inflation prompted bets that the Federal Reserve would raise rates at a slower pace than previously expected](https://www.financedigest.com/dollar-drops-as-inflation-cools-more-than-expected.html "Dollar drops as inflation cools more than expected").

The [dollar also tumbled](https://www.financedigest.com/yen-sinks-as-rates-outlook-diverges-nz-dollar-tumbles.html "Yen sinks as rates outlook diverges; NZ dollar tumbles") after U.S. data showed that consumer prices did not rise in July as the cost of gasoline fell, delivering the first notable sign of relief for Americans who have watched [inflation soar](https://www.financedigest.com/hungarys-booming-wedding-market-doused-by-soaring-inflation.html "Hungary’s booming wedding market doused by soaring inflation") over the past two years.

Traders are now pricing in a 50 basis points rate hike next month, not the 75 basis point [increase that had been expected before the consumer price](https://www.financedigest.com/syngenta-4q-profit-falls-as-raw-material-prices-increase.html "Syngenta 4Q profit falls as raw material prices increase") index report.

But while the data made riskier bets more attractive, some strategists were still cautious.

It’s quite a surprise and that’s why the [market is reacting so positively](https://www.financedigest.com/agriculture-container-and-tank-cleaning-equipment-market-witness-positive-growth-outlook-during-forecast-2028.html "Agriculture Container And Tank Cleaning Equipment Market Witness Positive Growth Outlook During Forecast 2028"). Is this a solid indication inflation is waning? It’s too early to make that statement. On the other hand assuming this [data doesn’t get revised its certainly good news for the economy,”](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") said Tim Ghriskey, senior investment strategist at Ingalls & Snyder in New York.

The Fed will also take into [account more inflation readings and August jobs data](https://www.financedigest.com/5-simple-ways-to-prevent-a-data-breach-from-putting-your-accountancy-practice-out-of-business.html "5 Simple ways to prevent a data breach from putting your accountancy practice out of business") before deciding on the size of its next rate hike at the September meeting.

There’s still quite a bit of data between now and September…we’ve only gotten one out of two CPI prints before then and we’ve got another payroll print as well and a full set of data effectively for August, so I think the jury’s still very much out on September,” said Gennadiy Goldberg, [interest rate](https://www.financedigest.com/ecb-raises-interest-rates-again-cuts-bank-subsidies.html "ECB raises interest rates again, cuts bank subsidies") strategist at TD Securities in New York.

The Dow Jones [Industrial Average rose 494.09 points](https://www.financedigest.com/partnerships-to-be-the-focal-point-of-medical-and-industrial-gloves-market.html "Partnerships to be the focal point of Medical And Industrial Gloves Market"), or 1.51%, to 33,268.5, the S&P 500 gained 68.45 points, or 1.66%, to 4,190.92 and the Nasdaq Composite added 262.09 points, or 2.1%, to 12,756.02.

The pan-European STOXX 600 index rose 0.71% and MSCI’s gauge of [stocks across the globe gained](https://www.financedigest.com/stocks-mixed-dollar-gains-after-robust-inflation-jobs-data.html "Stocks mixed, dollar gains after robust inflation, jobs data") 1.40%.

In Treasuries, Benchmark 10-year [notes last rose 21/32 in price](https://www.financedigest.com/uk-house-prices-end-2022-on-a-weaker-note-after-pandemic-boom.html "UK house prices end 2022 on a weaker note after pandemic boom") to yield 2.7225%, from 2.797% late on Tuesday. The 2-year note last rose 10/32 in [price to yield](https://www.financedigest.com/stocks-jump-as-treasury-yields-ease-and-oil-prices-sell-off.html "Stocks jump as Treasury yields ease and oil prices sell off") 3.1191%, from 3.286%.

The [yield curve](https://www.financedigest.com/u-s-yield-curve-inverts-after-strong-jobs-data-world-shares-mixed.html "U.S. yield curve inverts after strong jobs data; world shares mixed") between two-year and 10-year notes was at 39 basis points after earlier reaching minus 53 basis points, the deepest inversion since 2000.

The sharp [drop in Treasury yields](https://www.financedigest.com/wall-street-drops-treasury-yields-gyrate-on-fed-chairman-powells-remarks.html "Wall Street drops, Treasury yields gyrate on Fed Chairman Powell’s remarks") indicates that traders were likely positioned for a larger inflation increase.

The downside miss is certainly not something the markets were positioned for, I think the [market was really one way positioned for a higher inflation print and higher Fed](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") pricing,” said TD Securities’ Goldberg.

In currencies, the dollar index fell 1.1%, with the euro up 1.01% to $1.0314.

The Japanese yen strengthened 1.73% [versus the greenback to 132.84 per dollar](https://www.financedigest.com/sterling-falls-1-versus-dollar-rises-against-euro.html "Sterling falls 1% versus dollar, rises against euro"), while sterling was last trading at $1.2214, up 1.11% on the day.

[Oil prices fell in volatile trade as Druzhba pipeline flows resumed and as an expected rise](https://www.financedigest.com/oil-rises-about-2-with-u-s-and-china-inflation-in-focus.html "Oil rises about 2% with U.S. and China inflation in focus") in U.S. [crude stocks](https://www.financedigest.com/oil-dips-after-fed-comments-us-crude-stock-build.html "Oil dips after Fed comments, US crude stock build") intensified demand concerns.

U.S. crude recently fell 0.92% to $89.67 per barrel and Brent was at $95.40, down 0.94% on the day. \[O/R\]

Spot gold added 0.2% to $1,796.84 an ounce. It had charged higher and broke above the [key $1,800 level right after the inflation data](https://www.financedigest.com/2023-fintech-prediction-secure-and-private-data-usage-is-key.html "2023 FinTech Prediction: Secure and Private Data Usage is Key") before leveling off.

(Reporting by Sinéad Carew, Karen Brettell, Lawrence White and Sam Byford; Additional reporting by Sujata Rao; Editing by Kirsten Donovan)


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