Treasury yields soar as Fed on track for rate hike

Bond prices slipped. The yield on the 10-year U.S. Treasury note rose to 2.25 percent from 2.22 percent.

At 10am, the ringgit was trading at 4.4030/4100 against the USA dollar. The health index pared its post-election lift but was still 1.8 percent higher than November 8, even after Friday’s drop of 1.2 percent. The stock closed at $30.50 on Wednesday, and it jumped $7.05, or 23.1 percent, to $37.55.

The euro – which is facing a slew of political risks, including an Italian constitutional referendum next month and French and German elections next year – hit an 11-month low of $1.0582 before recovering to trade flat on the day at $1.0620.

Ms Yellen, who made no mention of the prospective policies of the incoming administration of President-elect Donald Trump, reiterated the expectation of Fed officials that future rate increases will be “gradual”.

Besides, strengthening of dollar against rivals overseas following hints of interest rate hike in December from US Federal Reserve chief Janet Yellen also weighed on the domestic currency. Trump’s policies would be “very, very inflationary, the interest rate is most likely to rise, and the dollar is most likely to rise too”, he said.

“While we continue to believe that the December FOMC statement will be less hawkish, the Fed chair clearly did not want to detract from their plans for tightening next month even if it means that it could alleviate the rise in the USA dollar and yields, wrote Kathy Lien, managing director at BK Asset Management in NY”. Still, the sharply higher bond yields that have followed Trump’s election, if they continue, would mean higher mortgage rates that could depress home purchases. Around 0100 GMT, the USA currency was changing hands at Y110.12, compared with Y110.11 late Thursday in NY. Tesoro shares rose 76 cents to $86.50. Tyson Foods fell $3.14, or 4.5 percent, to $65.88 and Kraft Heinz gave up 78 cents to $81.62. In addition, market players need to stay cautious about a possible turnaround in sentiment given risk factors such as the OPEC meeting later this month, weakness in emerging currencies and the sustainability of USA stock market strength. The German DAX inched up 0.2 percent, France’s CAC 40 index rose 0.6 percent and the U.K.’s FTSE 100 added 0.7 percent.

Silver fell 0.9 percent to $16.525 an ounce in London, reaching the lowest since June. Energy companies lagged the market after big gains earlier this week.

Warehouse club operator Costco lost $1.86, or 1.2 percent, to $150.28 and grocery store chain Kroger slid 75 cents, or 2.2 percent, to $32.95. Copper rose 2 cents to $2.49 a pound.

At 10.24 pm, while BSE Sensex was down 0.17 percent at 26,180.78, 50-share index Nifty was trading at 8,066.65, down 0.16 percent.