Wall Street got a reality check on Tuesday as higher-than-expected inflation data triggered a decline in both stocks and bonds.
Stocks pulled back from all-time highs as the consumer price index beat estimates across the board. Treasuries sold off, with two-year Treasury yields hitting their highest level since the Fed's pivot in December. Swap traders reduced their expectations of a rate cut by the central bank before July. The stock market's “fear indicator” – the VIX – rose the most since October. And a measure of Bloomberg Terminal's perceived risk in the U.S. market for investment-grade corporate bonds jumped – three issuers, Bloomberg Terminal, were sidelined.
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