U.S. consumer price data shows inflation is not spiking

3 minutes

NEW YORK, April 13- A gauge of global shares rose on Tuesday, led by surging technology stocks as consumer price data for March showed that the pace of inflation was not spiking as some feared.

The Consumer Price Index jumped 0.6%, the largest gain since August 2012, as massive vaccinations and increased fiscal stimulus unleashed pent-up demand. But the data is unlikely to change Federal Reserve Chair Jerome Powell's view that higher inflation will be transitory in the coming months.

We 'll just have a temporary flame-up in the prices but there wo n't be any structural inflation that is here to stay, said Carlo Franchini, head of institutional clients at Banca Ifigest SpA in Milan. The comments of Fed continue to be conciliatory.

The U.S. dollar dropped and the price of inflation-hedge gold rebounded from its lowest level in more than a week. But equity markets took the data in stride, especially tech-heavy indexes whose stocks could be affected by rising debt costs.

MSCI ’ s stock market gauge rose 0.13% across the globe, while the european STOXX 600 index climbed 0.23%. The top five holdings of the MSCI world index are the big U.S. technology companies.

On Wall Street the Dow Jones Industrial Average added 0.37%, the S& P 500 0.11% and the Nasdaq Composite lost 0.5%.

Asian stocks gained support on China trade data that showed exports in dollar terms rose more than 30% in March from a year earlier, short of expectations. Imports jumped 38%, their fastest pace in four years, suggesting a post-pandemic recovery in Chinese spending.

MSCI's broadest index of Asia-Pacific shares outside Japan closed up most of its gains and gave up 0.1%. China's blue-chip index fell 0.2%; Treasury yields are influenced by increased foreign demand while high bond yields and the cost of debt will lift lower risk equity assets, said Steven Oh, global head of credit and fixed income at PineBridge Investments.

The Treasury market reaction was effectively a collective yawn in continuing the trend that in the near term, economic yields are largely unrelated to market data, Oh said.

Inflation and secondary data contribute to determining the yields of Treasury, but it has been and will be a secondary factor for now.

Benchmark- year notes fell 1.7 basis points to yield 1.6552%, well below a 14 month high of 1.776% reached on 30 March.

Later on Tuesday, the U.S. Treasury will auction$ 24 billion of 30-year bonds after Monday's three and 10 year auctions were relatively smooth.

The dollar briefly spiked on the CPI data before reversing course and dipping to three-week highs in March, as markets anticipated fiscal stimulus would spur faster U.S. economic growth and higher inflation.

The dollar index fell 0.167%, the euro to$ 1.1936 up 0.23%.

The Japanese yen has strengthened 0.16% against the greenback at 109.19 per dollar. Eric Rosengren said on Monday that the U.S. economy could see a significant rebound this year due to looser money and fiscal policy, but the economy's job market still faced weakness.

Inflation remained highly accommodative with the 2% target rate still below the central bank's monetary policy stance.

On Tuesday, Bitcoin hit a record of$ 63,199, extending its 2021 rally to new heights a day before the listing of Coinbase shares in the US.

Brent futures gained$ 0.66 to$ 60.34 a barrel, U.S. crude futures rose$ 0.64 to$ 63.94 a barrel.

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