Bonds & Stocks
Stocks rose as inflation showed signs of moderation, paving the way for the Federal Reserve to pause its interest-rate hikes this month. Treasury two-year yields, which are more sensitive to imminent Fed moves, dropped five basis points to 4.5%. The dollar also retreated.
Economy
US inflation slowed in May, supporting the case for Fed officials to pause their run of interest-rate hikes this week. Both the consumer price index and the core CPI - which excludes food and energy - decelerated on an annual basis, highlighting inflation's descent since peaking last year. At 4%, year-over-year inflation is now at its lowest level since March 2021, according to data out Tuesday from the Bureau of Labor Statistics.
World
China's central bank surprised most economists and market participants by cutting a short-term policy interest rate, a sign that officials are increasingly concerned about faltering growth and are stepping up stimulus to boost the recovery. The People's Bank of China lowered the seven-day reverse repurchase rate by 10 basis points to 1.9% on Tuesday, the first reduction in the rate since August 2022.