NEW YORK – The dollar weakened and a gauge of global equity markets rose higher after data showed consumer prices rose as expected in November, easing concerns the US Federal Reserve would aggressively tighten monetary policy to combat inflation.
Gold rose as rising inflation lifted its safe-haven appeal, while US Treasury yields were little changed in a sign some bond investors do not see interest rate hikes starting as early as next year’s second quarter, as many equity investors do.
The US consumer price index increased 0.8 percent last month after surging 0.9 percent in October, while it accelerated 6.8 percent on an annualized basis to mark the biggest year-on-year rise since June 1982.
The data failed to unnerve investors who closely watched the Labor Department report. The benchmark for US equities, the S&P 500 index, closed at its 67th record high of the year, according to S&P Global.
“This data suggests that the Fed will have to tighten monetary policy more aggressively than just a couple of month ago, and the market’s acceptance of that is a little surprising to me,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
Brian Pietrangelo, managing director of Investment Strategy at Key Private Bank, said the Fed has raised interest rates four times since the 1990s and each time the market took the hikes well, with equities rising as rates move higher.
“We believe the market can handle rate increases as long as they’re transparent and they’re at the right pace,” he said, noting he expects two or three interest rate hikes next year.
