Dollar soars as U.S. yields spike; U.S. bank stocks rise

Mon Nov 14, 2016 12:01pm EST
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By Rodrigo Campos

NEW YORK (Reuters) - The U.S. dollar hit an 11-month peak against a basket of currencies on Monday as the risk of faster inflation and wider budget deficits sent Treasury bond yields shooting higher.

On Wall Street, the Dow Industrials set a record high led by financial stocks, on the expectation of looser regulations and consumer protections that could lift profits. Indexes turned negative in mid-morning trading, weighed by declines in the technology sector.

The dollar .DXY traded above the eye-catching 100 level against the world's other major currencies .DXY. The euro slumped to its lowest versus the greenback since January and the yen was at its weakest since June.

The dollar has been romping ahead since Donald Trump's win in the U.S. presidential election last week triggered a massive selloff in Treasuries.

"A lot of the move with the dollar has to do with higher yields," said Christopher Vecchio, currency analyst at FXCM in New York. "It's a seismic moment for markets."

Trump's win also sparked expectations of similar victories in Europe in the coming months. Worries over a rising tide of nationalist sentiment and restrictions on trade across Europe put pressure on the euro, analysts said.

Yields on the U.S. 10-year Treasury notes climbed to their highest since December at 2.302 percent US10YT=RR, while 30-year paper climbed above 3.06 percent, also the highest since December. German 30-year yields touched their highest since March above 1.06 percent, but gave up most of the day's rise.

Though selling moderated in early North American trading, analysts said they see no end in sight for the overall move lower in bond prices and higher in yields.   Continued...

A trader works on the floor of the New York Stock Exchange (NYSE) the morning after the U.S. presidential election in New York City, U.S., November 9, 2016. REUTERS/Brendan McDermid