10-year US debt yield is the lowest since May 2009.
Some see Fed stimulus in place for some time, some sure until next time.
LONDON TOKYO, June 9 - World stock prices climbed in on Wednesday to their lowest levels, while the US bond yields touched their lowest level in a month, as investors bet the Federal Reserve is not going to reduce its economic stimulus either.
The focus is on Thursday's release of Europe's consumer price data and a European Central Bank meeting for further clues about how soon policymakers can begin to withdraw support for the economy which has developed following the COVID 19 crisis.
The all-country world index for MSCI was last at 716.42, after hitting an intraday high of 718.19 on Tuesday, led by gains in Europe.
European shares were lower, with the FTSE and the FTSE down 0.5% in Britain.
In Japan, the broadest index for Asia-Pacific shares outside Japan has dropped 0.3% and the Nikkei average slips 0.4% in Asia.
Nasdaq futures were 0.2% higher in the United States and S&P 500 futures was up 0.1%.
On the other hand, the 10 - month debt yield hit a fresh low for the second day running, hitting 1.504% and down a quarter of a percentage point from a 14 month peak during March.
Germany's 10-year bund yield, which is closely related to the US Treasury index, extended its decline on Tuesday to fall to 0.240%, the lowest since May 7 as Euro area investors continued to value in a dovish outcome to the ECB policy meeting on Thursday.
As the recovery in the job market is contained, any discussion at the Fed on tapering is unlikely to gain momentum, even if it begins soon, said Naokazu Koshimizu, senior rates strategist at Nomura Securities.
So those who had bet on raising the yield curve are unwinding their positions while some investors are now buying to make a cash flow.
Last Friday was US payroll data showed hiring did not grow as quickly as economists expected despite increasing signs of a shortage of labour.
Many analysts think that more evidence of strong job growth would be required for the Federal Reserve to escalate its debate on tapering.
The U.S. central bank has said that the inflation rises in this quarter would be key and would not threaten price stability, one of its core mandates.
The latest US Consumer Price Data will show the core inflation rate of 4.7% and the annual base inflation of 3.4%.
While these readings are well above the Fed inflation target of 2%, many economists expect the inflation rate to ease in the future months, allowing the Fed to wait before taking any measures.
Nothing we see in tomorrow's report can prove or disprove any of the theories around the future path for inflation but I suspect that the market isn't entirely thinking of the Fed's steadfast message, said James Athey, investment director at Aberdeen Standard Investments.
I therefore see potential for a higher print rate to push bigger yields and shorter dated yields, thus flattening the curve and strengthening the dollar. This may not be a great environment for risky assets.
Inflation data from China showed its producer price index jumped for the third year in a year an increase on surging commodity prices.
However, the rise in consumer prices was softer than expected, helping to mitigate concerns. While the central bank of China is slowly scaling back weak stimulus policies, top leaders have vowed to prevent any sharp policy turns and keep borrowing costs low.
The Chinese yuan, whose rally to a three-year high last week was propelled in part by speculation Beijing might want a stronger yuan to tame inflationary pressure, ticked up to 6.3945 per dollar.
Other currencies hardly budged. The U.S. dollar index was parked at 90.077.
The euro was steady at $1.2179, while the dollar stood at 109.47 yen.
The German Bank's Currency Volatility Index hit its lowest point since February 2020 and sank even further on Wednesday.
When European bond markets calmed in 2005, Italy followed Greece with a bond sale and opened books on Wednesday for a 10 year issue.
The oil prices have been held up by U.S. Secretary of State Antony Blinken after the United States declared that even if Iran agreed to reach a nuclear deal, hundreds of sanctions on Iran would remain in place.
United States crude futures closed on Tuesday at $70 per barrel - for the last time since Oct 2018 and closed in at $70.40, up 0.5%.
Brent futures rose from $72.56 to $0.05, having before reached their lowest since May 20, 2019.