Monday, December 13, 2010

FT: Growth and bond yields up

Forex – The US dollar was initially underpinned by higher bond yields after data on Friday showed US consumers were more upbeat on the economic outlook in early December and US exports in October rose to a two-year high.

However, a rally in the euro has pushed the dollar index, which tracks the buck against a basket of its peers, down 0.6 per cent to 79.62. Additional pressure was applied to the greenback after Moody’s said the US tax package currently being debated in Washington increases the likelihood of a negative outlook on the the country’s triple-A rating. The dollar is down 1 per cent versus the euro at $1.3336.


Rates – “Core” bond yields are continuing to move higher as growth hopes – and, for some, fiscal deficit worries – see investors dump sovereign debt. The yield on the US 10-year is up 3 basis points to 3.36 per cent, earlier hitting a seven-month peak of 3.395 per cent. Benchmark yields have risen nearly 100 basis points in just over two-months, even as the US Federal Reserve applies its $600bn bond purchase programme.

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