Recent government data was also encouraging, showing that tariff-induced inflation economists have warned about for months has yet to materialize. On Thursday, the producer price index showed wholesale inflation coming in cooler than expected, a day after the consumer price index was similarly positive on consumer prices, showing inflation at a 2.4% annual rate.
“For the second day in a row, inflation data came in lower than expected, and this gives the Fed room to sit on their hands,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management. “As long as inflation isn’t increasing—or even better, is decreasing—the Fed can be patient and wait for more information on how the new tariffs and trade negotiations are going to impact the price stability part of their dual mandate later this year.”
Bond yields fell. A closely watched auction of 30-year Treasuries Thursday was awarded at 4.844%, Bloomberg reported, quelling fears that investors were starting to boycott U.S. bonds.
The dollar continued to lose ground against a basket of currencies. So far this year, the greenback has lost about 9% of its value, and is trading at its lowest level in more than three years.
