Dollar on 7-Week High Amid Strong Yields

U.S. BOND YIELDS: The yield on the 10-year Treasury note drew close to 3 percent on Monday, a milestone it has not reached since January 2014.

South Africa’s Gold Fields reported lower production for the March quarter and flagged more challenges at its problematic South Deep mine on Wednesday, sending its share price sharply lower.

The yield on the 10-year USA government bond hit three per cent for the first time in four years on Tuesday, pushed up by expectations of higher inflation to come. The Stoxx Europe 600 Index pared an increase as traders assessed a mixed bag of corporate results, while US equity futures posted a more solid jump. Shares were mixed in Southeast Asia.

The euro nursed losses at a two-month low on Tuesday on growing concerns that firmer U.S. Treasury yields would reduce incremental demand for the region’s bonds and stocks at a time when hedge funds have amassed record long bets in the single currency. Investor risk appetite has waned a bit this week on some disappointing corporate earnings reports and worries about rising interest rates and inflation. “But if we have a slow drift higher, I don’t see any reason why it has to be a headwind”.

Moreover, it’s a threat to riskier assets beyond just USA stocks. Aluminum producers tumbled after the Treasury Department moved to ease sanctions against Russian aluminum company Rusal.

ENERGY: Benchmark U.S. crude oil edged 8 cents lower to $67.62 a barrel in electronic trading on the New York Mercantile Exchange.

Earnings season continues. Among those reporting: Amazon.com, Samsung and Credit Suisse.

All eyes will be on Thursday’s meeting of the European Central Bank. NY time, the highest in more than 11 weeks.

The Dow Jones Industrial Average fell 14.25 points, or 0.06 percent, to 24,448.69, the SP 500 gained 0.15 points, or 0.01 percent, to 2,670.29 and the Nasdaq Composite dropped 17.53 points, or 0.25 percent, to 7,128.60.

Among smaller banks, Simmons First National rose 3.8 percent to $30.05 and Banner gained 4.4 percent to $58.26. Platinum was about 0.5 per cent higher at US$926.70 an ounce, while palladium rose 0.1 per cent to US$1,031.22 an ounce. These emerging market countries run account deficits. U.S. crude futures settled up 0.35% to $US68.64 a barrel.

“The increase that we’ve seen in bonds recently has definitely made bonds more attractive than some of the stocks out there, especially with stocks continuing to struggle”, said Mary Ann Hurley, vice president in fixed income at D.A. Davidson in Seattle.

The fluctuations in equities were probably caused by “the 10-year bumping up against 3 percent”, Gary Bradshaw, a portfolio manager at Hodges Capital Management in Dallas, said by phone. If the bond you bought for $1,000 pays you $20 per year – that’s a 2 percent annual yield.

France’s CAC 40 was down 0.8 percent to 5,399, while Germany’s DAX fell 1.7 percent to 12,343. Copper lost 0.8 percent to $3.11 a pound.

Gold climbed 0.1 percent to $1,326.11 an ounce.

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US 10-year Treasury yield climbs to January 2014 highs on signs of higher inflation, hopes of further rate hikes this year