Stocks rose and bond yields fell sharply Thursday morning after a fresh read on business inflation showed prices were broadly flat in July.

The report fueled optimism on Wall Street that the Federal Reserve may hold off on raising rates this year, after all, even as inflation remains stubborn.

“The July report supports arguments for the Federal Reserve to maintain its current policy stance as inflation pressures show tentative signs of moderating,” PNC Financial senior economist Kurt Rankin wrote in a note. “While energy prices remain elevated relative to pre-shock levels and continue to influence inflation expectations, the June and July PPI reports provide the first evidence that those pressures may be beginning to ease.”

The S&P 500 jumped 0.6%, while the Nasdaq Composite index jumped 0.8%. The Russell 2000, which tracks small and medium sized companies, also increased. Both the Russell and S&P 500 indexes also hit new all-time highs in early trading.

U.S. Treasury bonds also jumped higher, which sent their yields tumbling. The 10-year Treasury yield fell to 4.61%, its lowest level since last week. The 30-year Treasury yield, which had soared to nearly 5.3% in the wake of the Federal Reserve’s last meeting, fell to around 5.18%.

Those falling bond yields could bring short-term relief to consumers looking to take out a mortgage, loan or refinance debt. Before the drops, the average 30-year fixed rate mortgage was 6.74%, not far from its highest level this year.

Still, later Thursday, the U.S. Treasury Department is set to auction $25 billion worth of 30-year bonds at what could be their highest interest rate in a quarter of a century.

Earlier, the Bureau of Labor Statistics reported that the Producer Price Index was unchanged from June to July, while falling from 5.5% in June to 4.7% in July on an annual basis.

Using that figure, Wall Street economists began projecting that core PCE, the Federal Reserve’s preferred inflation reading which will be released on August 26, would likely rise by only around 0.2%.

“Core PCE should ease to 3.2%[year-over-year] in July,” Citigroup economist Veronica Clark wrote in a note. However, she said that there was still a “risk it could stay at 3.3%.”

She added: “While these prices may rebound in August, we see few signs that higher input costs are pushing up final consumer selling prices.”

Gary Schlossberg, global strategist at Wells Fargo Investment Institute, called Thursday’s business inflation number “friendly,” adding that “slowing PPI inflation last month was well-balanced between core goods and (somewhat unexpectedly) services.”

By mid-morning, as investors digested all of this data, bond traders backed off from betting that the Fed would hike rates this year.

However, shortly after the data was released, Cleveland Federal Reserve President Beth Hammack reiterated her frequent call to raise rates.

“I think that we ​need to act now because I think we need to bring inflation back down to that 2% objective faster than what a longer-term ​glide path would say with interest rates at this level,” she said, referring to the Fed’s long-held target for inflation.

Hammack was also one of three Fed officials who dissented during the central bank’s most recent interest rate meeting, wanting a rate hike instead of holding rates steady.

The Fed’s policy-setting committee is scheduled to make its next interest rate decision in mid-September.