US stocks lift off after Bostic comments, EU sees record inflation print driving bond yields higher

Despite U.S. bond yields continuing to climb and the 10-year going above 4% in yield, U.S. stocks managed to rebound nearly 1% on Fed Bostic comments. Hong Kong and China stocks slid and gave back some of the gains from the previous session in the absence of notable headlines ahead of the “two sessions” meeting starting this weekend.

The US dollar gained broadly against major currencies. Crude oil continued to climb with WTI crude finishing Thursday at USD78.2. A strong US labour market figure , unemployment claims dropped to 190k when 196k was expected, in combination with a record high Core CPI figure out of Europe saw the US equity session get off to a rocky start as bond yields soared.

That all changed later in the session as a Bloomberg headline hit with comments from Fed member Bostic.

Which saw an instant reaction in stocks which rallied steeply, sending the Nasdaq back above its critical 200 day moving average support level.

Amazingly , a pause in rates in July was already priced in by Fed fund futures, and Bostic isnt even a voting member which I think shows how desperate the bulls seem to be for any perceived “dovish” tone from the Fed to kickstart another up move in equities.

In the Eurozone, CPI figures came out hotter than expected, with the Core reading hitting a record high, this sent terminal ECB rate expectations to 4.00% for the first time. The reaction in the Euro was muted though, these higher readings seemingly did not surprise FX traders after hot German, Spanish and French CPI figures already released earlier in the week.

The EURUSD briefly rallied before resuming its downtrend, breaking through the 1.06 level.

Gold limped lower in the face of a stronger USD , still holding below its 23.6 Fibonacci retracement level which has proven to be stiff resistance since mid February.

In major economic announcement coming up, only the US ISM Services PMI looks likely to move the markets. As any figure recently that has anything to do with inflation and business activity, this one will be closely watched.