U.S. stocks plunged, posting their biggest weekly percentage declines since January, after the Labor Department reported a faster-than-expected increase in inflation last month
Following the inflation report, two-year Treasury yields , which are highly sensitive to rate hikes, spiked to 3.057%, the highest since June 2008. Benchmark 10-year yields reached 3.178%, the highest since May 9.The U.S. Labor Department's report showed the consumer price index increased 1.0% last month after gaining 0.3% in April. Economists polled by Reuters had forecast the monthly CPI picking up 0.7%.
Stocks have been volatile this year, and recent selling has largely been tied to worries over inflation, rising interest rates and the likelihood of a recession. "Today's report should extinguish any pretense that a 'pause' in rate hikes will likely be appropriate by the end of summer, as the Fed is clearly still behind the eight ball on bringing inflation under control," said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.
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