Wall Street traders drove stocks higher and bond yields lower as an unexpected inflation decline reinforced speculation the Federal Reserve will resume cutting interest rates in September.
Just a week ahead of the Fed decision, the first drop in producer prices in four months soothed worries that elevated inflation would create a challenge for policymakers trying prevent a jobs downturn. The market reaction was immediate, and traders almost fully priced in three rate reductions in 2025.
Stocks rise on inflation surprise.
Source: Bloomberg
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