Markets Rally as Waller Signals Patience on Interest Rates

US stocks rallied and bond yields fell on Thursday after Federal Reserve Governor Christopher Waller signaled patience for raising interest rates. Waller's comments came as inflation worries mounted due to surging oil prices.

The yield on the benchmark US 10-year Treasury note dropped 3.8 basis points, its biggest fall since August 25, to 4.756%. The Japanese yen jumped 2% against the US dollar as traders bet on a Bank of Japan interest rate hike.

Markets now price in a roughly 50% chance for a Fed rate hike at the mid-September meeting, down from about 63% previously. Waller said he would argue in favor of keeping rates steady if upcoming data confirms cooling inflation pressures.