Strong US Inflation data

Consumer prices in the US rose by 0.4 per cent in April, the highest level they have been in three years and exceeding expectations of a 0.3 per cent rise. The contributors are rising energy and food prices, up by 3.4 and 0.2 per cent respectively. These inflationary pressures have brought discussions over the next Fed rate rise back into the spotlight and led investors to review their timing for the next rise, with some pushing forward their expectations to a June hike. This led to a drop in US stocks, given the prospect of higher interest rates, whilst the US 10 Year Treasury yield, highly sensitive to inflation, was up at 1.78 per cent.