Global stocks rose while U.S. Treasury yields fell on Friday as investors reflected on the Bank of Japan’s decision to alter its loose monetary policy in the face of inflation. The Bank of Japan offered to buy 10-year Japanese government bonds above the 0.5% target rate while keeping its benchmark short-term rate at -0.1% and long-term bond yields at zero.
In New York, the Dow Jones Industrial Average rose 0.5% to 35,459.29, the S&P 500 climbed 0.99% higher to 4,582.23, and the Nasdaq Composite Index surged by 1.9% to 14,316.66.
Despite Japan’s Nikkei closing 0.4% lower, the MSCI’s broadest index of Asia-Pacific shares gained 0.42%. European stocks declined by 0.2%, slightly lower than Thursday’s 17-month high following the European Central Bank’s decision to raise interest rates to their highest level in over two decades.
Garrett Melson, portfolio strategist at Natixis Investment Managers, appeared confident that inflation is set to continue cooling. “Right now, the market fully realizes that it’s all about how the data unfolds. We’re really in the midst of a material slow down in inflation trends and at the same time growth is holding up well, which is what you’d expect for the soft landing,” Melson explained.