Stocks higher after inflation data keeps Fed expectations on hold

FILE PHOTO: Traders work on the floor at the New York Stock Exchange in New York City, U.S., September 9, 2024. REUTERS/Brendan McDermid/File PhotoNEW YORK :Global stocks were higher and poised for a weekly gain while longer-dated U.S. Treasury yields rose after a reading on inflation and consumer confidence kept expectations for the path of Federal Reserve interest rate cuts intact.

In a separate report, the University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 68.9 this month, compared with a final reading of 70.1 in September and below the 70.8 estimate as high prices frustrate buyers. Gains were capped, however, by a 7.5 per cent drop in Tesla shares as the electric vehicle maker's robotaxi event disappointed.

Markets had been fully pricing in a cut of at least 25 bps with a chance for another outsized 50 bps cut last week until a strong U.S. payrolls report prompted investors to dial back expectations. Longer-dated U.S. yields were higher as investors continue to gauge the Fed's rate path. The yield on benchmark U.S. 10-year notes edged up 0.4 basis point to 4.098 per cent while the 2-year note yield, which typically moves in step with interest rate expectations, fell 3.7 bps to 3.962 per cent.

Against the Japanese yen, the dollar strengthened 0.39 per cent to 149.15. Sterling strengthened 0.14 per cent to $1.3076 but remained near a one-month low after data showed Britain's economy grew in August after two consecutive months of stagnation.

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