Investors were optimistic on Tuesday that upcoming U.S. inflation data will provide evidence that price pressures are easing, potentially paving the way for an end to Federal Reserve rate hikes.
Stock markets rose and the U.S. dollar fell slightly as markets awaited this week's Consumer Price Index release. The inflation data, due on Wednesday, could show price increases moderating, which would support hopes that the Fed may soon slow its pace of interest rate rises.
Several Fed officials spoke on Monday, suggesting that while more rate hikes are likely needed, the central bank's monetary tightening cycle may soon end. Their comments boosted investor optimism that the Fed is nearing an end to aggressive rate increases.
Asian shares mostly gained on Tuesday. European futures also pointed to higher openings. In the bond market, U.S. Treasury yields declined, while the Japanese yen strengthened slightly against the dollar.
Investors will be watching the inflation data closely for any signs that inflation is finally peaking. If price pressures continue to show signs of slowing, markets may see further increases in risk appetite and falls in the U.S. dollar. However, some analysts warn any decline in inflation could be short-lived.
