Bond Rally Gains Traction following Strong 30-Year Bond Auction – US Market Wrap
A strong $22 billion sale of 30-year U.S. Treasuries helped calm concerns about investor appetite amid rising deficits, with yields nearing 4.8%. Softer inflation data bolstered expectations of Fed rate cuts if growth slows, pushing the dollar to a three-year low.
Equities gained, with the S&P 500 closing at its highest since February 20. Oracle shares hit a record on an upbeat sales forecast. Geopolitical tensions briefly pressured markets following reports that Israel may take military action against Iran, though oil prices later recovered most losses.
US inflation remained subdued in May, with the Producer Price Index rising just 0.1% month-over-month, below the expected 0.2% increase. This suggests that recently implemented tariffs have not yet led to significant price pressures for consumers and businesses.
President Donald Trump reiterated criticism that the Federal Reserve has been too slow to cut interest rates, despite growing signs of slowing inflation. He clarified that he does not intend to fire Fed Chair Jerome Powell, though he plans to nominate a new central bank leader soon. On trade, Trump indicated he may raise tariffs on autos to support domestic manufacturing, a move that added pressure to shares of General Motors, Ford, and Stellantis.
