The world’s biggest bond market sold off after another hot inflation report reinforced bets the Federal Reserve will be in no rush to cut rates even as some areas of the economy show signs of sluggishness.
Treasury yields climbed and stocks retreated as the data underscored the Fed’s challenges in achieving its 2% inflation goal. Following the steps of the consumer-price data, the producer price index also signaled a pickup in cost pressures. In contrast, retail sales missed estimates. While it’s probably too early to draw any conclusions, the set of figures raised some eyebrows about the specter of stagflation.