Inflation worries returned to Wall Street: Interest rates and oil on the rise

In the United States, stock indexes fell and government bond yields rose on Friday. In the background are concerns about the acceleration of inflation caused by the rise in oil prices. The fear is that central banks around the world will have to tighten their monetary policy to keep inflation, i.e. the rise in consumer prices, under control.

Data released earlier this week showed that April’s consumer price index rose 3.8 percent year-on-year, which is the highest reading since 2023. In turn, core inflation adjusted for food and energy price fluctuations rose 2.8 percent.

For someone starting at the head of the US Federal Reserve To Kevin Warsh keeping inflation expectations under control is very important. Jerome Powell term as Fed chief officially ended on Friday, May 15.

“He has a problem on his hands if inflation expectations get a little out of whack,” said Societe Generale Americasin research director Subadra Rajappa in an interview with the news agency Bloomberg.

At the time of writing, the Brent benchmark cost more than $109 per barrel. Meanwhile, the price of West Texas Intermediate oil was over $105 per barrel.

The Wall Street Journal reports that the world’s oil reserves are melting at a rapid pace. If the closure of the Strait of Hormuz continues, some important fuels may become acutely scarce and prices may rise further within a few weeks.

Interest rates on US government bonds rose. The market interest rate for the ten-year government bond was 4.60 percent, and the interest rate for the two-year bond was 4.08 percent. The market interest rate for the 30-year loan was 5.13 percent. The interest rate rises when investors sell their holdings.

Yesterday, Thursday, the Wall Street stock market rose again to their records. On Friday, the S&P 500, which tracks large companies, fell 1.2 percent to 7,408.50 points. The technology-focused Nasdaq weakened by 1.5 percent.

The flagship Dow Jones index fell 1.1 percent. The Russell 2000 index, which tracks small companies, fell 2.4 percent.

There were risers from large technology companies Apple (+0.7 percent) and Microsoft (+3.1 percent). Microsoft received support from the news that the billionaire investor Bill Ackman has bought the company’s shares.