US stocks and bonds rally after lower than forecast inflation data

US stocks and government bonds rallied on Wednesday after data showed inflation in the world’s largest economy had steadied, raising hopes that the Federal Reserve may temper its aggressive rate rises to subdue soaring prices.

The consumer price index data published on Wednesday showed that prices in the US rose 8.5 per cent year on year in July, a slower increase than in June and below economists’ forecasts of 8.7 per cent. The…