Brent at 16-month high, Treasury yields climb further

Thu Dec 1, 2016 5:04pm EST
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By Rodrigo Campos

NEW YORK (Reuters) - Brent crude futures rose to a 16-month high on Thursday on the heels of OPEC's agreement a day earlier to cut oil output, while Treasury yields continued to climb following the weakest monthly performance for global bonds in almost 13 years.

The benchmark 10-year U.S. Treasury yield jumped to its highest since July 2015 to start the month, after Bank of America Merrill Lynch's Global Broad Market Index fell 1.76 percent in November, its steepest monthly percentage drop since a 2.06 percent fall in July 2003. .MERGBMI

Bets on faster inflation in the United States, on the back of higher oil prices and the expected policies of the incoming Trump administration, have sent Treasury yields soaring as inflation erodes bond prices. A stronger-than-expected U.S. manufacturing reading for November and a rise in U.S. construction spending in October also boosted yields.

"Investors are building the possibility of inflation into the Treasury curve," said Ellis Phifer, market strategist at Raymond James in Memphis, Tennessee.

The 10-year U.S. Treasury yield US10YT=RR hit a session high at 2.492 percent. The benchmark notes last were down 24/32 in price to yield 2.4517 percent.

The dollar index .DXY, which closed its second consecutive month of gains above 3 percent, slipped 0.54 percent. The British pound GBP= strengthened against the greenback for the seventh time in nine sessions.

The euro EUR= rose 0.70 percent to $1.0659.

On Wall Street, declines in technology shares weighed on the Nasdaq Composite and the S&P 500. With the backdrop of higher interest rates, investors are likely to trim exposure to companies with high price-to-earnings ratios, which include some of the largest tech names, according to Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 22, 2016.  REUTERS/Brendan McDermid