US futures rise along with global stocks as Fed officials soothe inflation fears, sending bond yields lower

Inflation has caused a volatile week on Wall Street.

US futures rose along with global stocks on Friday after Federal Reserve officials stepped in to try to soothe investor fears over rising inflation, and equities rebounded somewhat from sharp falls.

Commodities prices also recovered slightly after sliding earlier in the week on expectations that the Fed may cut back its support for the economy sooner than expected, while bond yields fell.

S&P 500 futures were 0.46% higher on Friday after the benchmark index rose 1.22% on Thursday. Futures for the tech-heavy Nasdaq 100 were up 0.67% and Dow Jones futures had risen 0.36%.

Despite Thursday’s rebound, the S&P 500 had fallen more than 2.8% across the week after sharp falls in the wake of Wednesday’s stronger-than-expected inflation report.

Consumer price index inflation jumped 4.2% year on year in April, the strongest rise since 2008.

The prospect of sustained stronger inflation has worried investors, as it eats into the returns on financial assets and raises the prospect that the Fed may reduce support for the economy to cool prices.

Yet the Fed has insisted it will look past this rise in inflation, which it argues will be temporary.

Fed governor Christopher Waller on Thursday reiterated the point, saying: “The factors putting upward pressure on inflation are temporary, and an accommodative monetary policy continues to have an important role to play in supporting the recovery.”

His words echoed other Fed officials and appeared to calm market nerves on Thursday and Friday.

Lee Hardman, currency analyst at Japanese bank MUFG, said: “The comments have had some dampening impact on Fed rate hike expectations.”

Bond yields, which move inversely to prices, pulled back after rising earlier in the week. The yield on the key 10-year US Treasury note was down 2.8 basis points to 1.640% on Friday.

Asian stocks rallied overnight, with China’s CSI 300 up 2.36% and Japan’s Nikkei 225 rising 2.32%. In Europe, the continent-wide Stoxx 600 was up 0.33% and Britain’s FTSE 100 had climbed 0.77%.

Commodities prices steadied after sharp falls earlier in the week, which were driven by concerns that higher inflation might force the Fed to raise interest rates sooner than previously expected, dampening the economy.

Oil prices gained, with Brent crude up 0.6% to $67.45 a barrel and WTI crude 0.74% higher to $64.29 per barrel.

Bloomberg’s agriculture and livestock commodity index was up 0.94% to 90.89, having tumbled from a high of more than 93.4 earlier in the week.

The dollar index was down 0.34% to 90.44, after climbing sharply on Tuesday. The greenback has been pulled in different directions by volatile bond-market action.

Bitcoin was marginally lower and traded at around $50,300 after a sharp fall on Wednesday and Thursday in the wake of Elon Musk’s decision to halt payments for Tesla in the cryptocurrency.

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