US inflation surge lifts dollar and bond yields as Trump arrives in Beijing

Global equities rose slightly on Wednesday, with MSCI’s global equities gauge advancing 0.26% to 1,106.23, as markets digested a fresh wave of US inflation data. The US dollar strengthened to a two-week high, while US Treasury yields climbed for a third consecutive day, reflecting investor concerns over persistent price pressures and their implications for Federal Reserve policy.

The Labor Department’s Bureau of Statistics reported that US producer prices increased more than expected in April, marking the largest gain since early 2022. This followed Tuesday’s consumer price data, which showed the biggest rise in three years driven by energy-related costs. Jim Baird, chief investment officer at Plante Moran Financial Advisors, noted that the data exacerbated existing concerns about upside inflation pressure, creating conflicting forces for investors weighing economic growth against potential rate hikes.

In Washington, President Donald Trump arrived in Beijing for a two-day summit with Chinese President Xi Jinping, accompanied by business leaders including Nvidia’s Jensen Huang and Elon Musk. While some investors hoped the talks could facilitate progress in the Middle East conflict, Baird cautioned that tangible outcomes regarding the war and trade relations would likely be limited. Trump stated on Tuesday that he did not believe he would need China’s assistance to end the conflict.

Wall Street indices showed mixed results at 11:00 am ET. The Dow Jones Industrial Average fell 0.52% to 49,502.19, while the S&P 500 rose 0.14% to 7,411.11 and the Nasdaq Composite gained 0.62% to 26,249.15. The pan-European STOXX 600 index also advanced 0.64%. Baird highlighted that the upside for stocks has been supported by a strong earnings season, although gains have been concentrated in technology and artificial intelligence-adjacent stocks.

In fixed income, longer-dated yields reached their highest levels since July before easing slightly as traders assessed the impact on Fed policy. The yield on benchmark US 10-year notes rose 1.7 basis points to 4.489%, while the 30-year bond yield increased 2.1 basis points to 5.0484%. The dollar index rose 0.19% to 98.51, with the euro down 0.25% and the Japanese yen weakening against the greenback. Oil prices were mixed, with US crude rising 0.87% to $103.07 a barrel, while spot gold fell 0.72% to $4,679.79 an ounce.