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5 Minutes, by Read this article (Adds Treasury auction, quotes, latest prices) * Consumer prices in the United States rose in June* Treasury rates in the United States fell after an initial rise* A Treasury auction of 30-year notes was badly received* Global asset performance tmsnrt.rs/2yaDPgn Reuters, NEW YORK/LONDON, July 13 – After the greatest jump in U.S. inflation in 13 years spooked investors who had seen equity prices double from last year’s lows, bond rates jumped and global share prices dropped after hitting fresh highs on Tuesday. The Labor Department reported that the U.S. consumer price index rose 5.4 percent year over year in June, the greatest advance since August 2008. This sent U.S. equities futures and the yield on benchmark U.S. government notes lower. After a lackluster response to a Treasury auction, the benchmark 10-year note rose 5 basis points to 1.413 percent in early afternoon trade, after sliding to 1.343 percent earlier. The increase came after a 5.0 percent rise in the 12 months leading up to May, while CPI jumped 0.9 percent month over month after rising 0.6 percent in May, alarming investors. Stocks on Wall Street initially reacted positively to the CPI report, bidding up technology stocks, which normally benefit from low interest rates. Then there was the Treasury sale of $24 billion in 30-year notes, with a yield of 2.000 percent, well above the market at the bidding deadline of 1.976 percent, according to Lou Brien, market strategist at DRW Holdings in Chicago. According to Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey, “the increase in inflation is ultimately a negative hanging over a market that has enjoyed a phenomenal rally from the lows of March 2020.” “Inflation isn’t the worst news for equities,” Meckler said, “but it’s very poor news for bonds.” “You’re starting to see some of the potential downsides that could put an end to this year’s spectacular surge.” The MSCI world equity index dipped 0.15 percent to 726.27, while Europe’s broad FTSEurofirst 300 index rose 0.07 percent to 1,779.34. The Dow Jones Industrial Average sank 77.78 points, or 0.22 percent, to 34,918.4, the S&P 500 dropped 9.85 points, or 0.22 percent, to 4,374.78 and the Nasdaq Composite slid 40.06 points, or 0.27 percent, to 14,693.18 on Wall Street. Traders are watching Fed Chair Jerome Powell’s testimony before Congress on Wednesday and Thursday for any clues about when the central bank would start tapering its bond-buying program. The euro was down 0.62 percent at $1.1785 at the time of writing, while the JPY was up 0.25 percent at $110.6300. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1% overnight, its highest daily increase since late June, powered by a 1.6 percent advance in Hong Kong, where tech companies rallied broadly. The Nikkei in Japan was up 0.5 percent, while Australian stocks were mostly unchanged. Tencent Holdings Ltd gained 3.9 percent in Hong Kong after China’s antitrust authority authorized its plan to take China’s No. 3 search engine, Sogou Inc, private in a $3.5 billion deal on Tuesday. “We have obviously witnessed a (new) round of corrections in the technology sector, which has a significant impact on Hong Kong’s stock market, as a result of fears of a new round of regulatory crackdown following the Didi investigation. In light of this, there is potential for a short-term recovery “Beijing Yunyi Asset Management’s chief investment officer, Zhang Zihua, stated. In recent weeks, euro zone government bond yields have fallen in step with US Treasury yields, and are nearing their lowest levels since early April. Germany’s 10-year bond yield remained constant at -0.30 percent, near to last week’s three-month low of -0.344 percent. The rand fell to a three-month low versus the dollar, falling 1.2 percent to 14.4000, as violence erupted over former President Jacob Zuma’s detention. Tight supply and forecasts of a significant drop in U.S. and worldwide petroleum stockpiles supported oil prices, however fears of the COVID-19 variety spreading restricted gains. Brent crude was recently trading at $76.35 a barrel, up $1.19, or 1.58 percent. At $75.19 per barrel, U.S. crude was up $1.09, or 1.47 percent. Herbert Lash contributed reporting; additional reporting by Karen Brettell and Saqib Ahmed in New York, Karen Pierog in Chicago, Julie Zhu in Hong Kong; Sujata Rao and Vidya Ranganathan; Sujata Rao and Vidya Ranganathan; Sujata Rao and Vidya Ranganathan; Sujata Rao and Vidya Ranganathan; Sujata Rao and Vidya Ranganathan; Suja Stephen Coates, Emelia Sithole-Matarise, Gareth Jones, Dan Grebler, and Sonya Hepinstall worked on the editing./nRead More

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