Investment Daily: US stocks and Treasuries rose on softer-than-expected CPI data

15 July 2026

US stocks rose on Tuesday, helped by lower Treasury yields and a rebound in technology stocks. The S&P 500 rose 0.4%.

US Treasuries rose as softer than expected CPI inflation reduced near-term Fed tightening expectations. 10-year yields fell 3bp to 4.59%.

European stocks edged marginally higher on Tuesday. The Euro Stoxx 50 was up 0.1%. The German DAX and French CAC both ended little changed. In the UK, the FTSE 100 rose 0.3%.

European government bonds were range-bound. 10-year German bund yields ended flat at 3.11% and 10-year French bond yields edged up 1bp to 3.89%. In the UK, 10-year gilt yields closed at 4.98% (+1bp).

Asian stock markets traded mixed on Tuesday, with a rebound in technology shares from their intraday lows. Korea’s Kospi closed 0.7% higher, as Japan’s Nikkei 225 also gained 0.7% amid lower JGB yields. Elsewhere, China’s Shanghai Composite and Hong Kong’s Hang Seng rose 1.4% and 0.5%, respectively. India’s Sensex ended 0.7% lower.

Crude oil prices rose on Tuesday. WTI for August delivery settled 1.5% higher at USD79.3 a barrel. 

The Bank of Japan (BoJ) raised its policy rate by 25bp to 1.00%, as widely expected, and decided to halt the reduction in JGB purchases from April 2027. The BoJ highlighted the risk of underlying CPI inflation deviating upward above 2%.

The Reserve Bank of Australia (RBA) kept its policy rate unchanged at 4.35%, as widely anticipated. Governor Bullock noted upside risks to inflation and did not rule out further tightening.

In China, May activity indicators continued to reflect a two-speed economy. Industrial production showed resilience, up 4.5% YOY, driven mainly by gains in high-tech manufacturing and new energy sectors thanks to robust exports. However, non-tech domestic demand was softer than expected as the property sector remained under pressure. Retail sales fell 0.6% YOY, partly reflecting an unfavourable base effect from last year’s trade-in subsidies. Fixed asset investment contracted by 4.1% YOY in the first five months, despite strong advanced manufacturing investment.

In the US, declining energy prices point to a limited mom change in headline PPI in June, while trade services inflation has been volatile recently.

In China, GDP growth in Q2 is expected to decelerate as monthly indicators continue to reflect a two-speed economy. Industrial production should remain solid, supported by strong external demand, new energy sectors and high-end manufacturing. By contrast, retail sales are likely to stay subdued, reflecting unfavourable base effects from last year’s trade-in subsidies and tepid domestic demand outside the tech sector.

The Bank of Canada should keep interest rates unchanged for a prolonged period, given benign core inflation, weak growth and a soft labour market.