NEW YORK (Reuters) - The U.S. dollar slid and U.S. government debt yields fell on Thursday as a modest rise in consumer prices in April damped expectations that faster inflation could lead the Federal Reserve to boost interest rates more than expected in 2018.
The U.S. Labor Department said its Consumer Price Index rose 0.2 percent last month, less than forecasts for 0.3 percent, as a moderation in healthcare prices offset increases in the cost of gasoline and rental accommodations.
The dollar fell against the euro, the Japanese yen and a basket of other major currencies, while the Mexican peso and Brazilian real jumped about 1 percent on the news.
Benchmark 10-year U.S. Treasury notes rose 8/32 in price to push yields down to 2.964 percent after breaching 3 percent on Wednesday.
“Inflation is going to rise in year-over-year terms over the summer, but the rise remains moderate rather than sharp,” said
Eric Winograd, senior economist at AllianceBernstein LP.
The soft read on inflation should give the Fed comfort that their gradual approach to raising rates is the correct one and ease market concerns, he said.
“I view today’s number as a slight positive for risk assets in the near term,” Winograd said.
MSCI’s broad gauge of global equity markets rose 0.51 percent and turned positive for the year as it hit three-weeks highs.
Chinese internet giant Tencent, Apple, Microsoft and Facebook led the index’s advance, while the U.S. technology sector lifted Wall Street.
Emerging market stocks rose 1.26 percent, while Asia-Pacific shares outside Japan and the Nikkei in Tokyo both earlier closed higher.
The pan-European FTSEurofirst 300 index of leading regional shares fell 0.25 percent, but shares in London, Germany and France were higher.
On Wall Street,