U.S. bond yields surged to the highest in a year, while American stocks climbed to records as optimism over the economic recovery continued to ripple through markets.
Gold Extends Slump With Dollar, Yields Gaining; Platinum Slips
Bloomberg 2/16/2021 Yvonne Yue Li and Eddie Spence
(Bloomberg) Gold headed for a fourth straight decline as the dollar rebounded and Treasury yields advanced to the highest in almost a year amid bets for a swift economic recovery.
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Rates on 10-year yields, a benchmark for global borrowing, eclipsed their peak from the March market pandemonium as increasing energy costs and the outlook for U.S. government spending bolstered reflation trades. Rising yields erode gold’s appeal, as the metal bears no interest. Equities also rallied, while a stronger dollar made greenback-denominated bullion less attractive for investors holding other currencies.
Greenback fightback: The hot currency trade of 2021 might be going bust
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By Vivien Lou Chen and Todd Gillespie
February 17, 2021 7.12am
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Betting on a drop in the US dollar was one of the most-popular macro trades heading into 2021. But after a painful start to the year, many are wondering whether they wrote off the greenback too quickly.
The argument was simple: a broad vaccination-led global recovery and a stimulus-fuelled expansion of the US deficit would encourage investors to favour assets outside America - sinking the dollar and extending last year’s 5 per cent plunge. Instead, a relatively successful vaccine rollout in the US and signs that further government spending will do more to boost the domestic economy than weigh it down with debt have traders changing course. That’s buoyed rates, burnished the appeal of American investments, and prompted a ru
Platinum surged above $1,300 an ounce for the first time in more than six years on bets that a recovery in industrial demand and stricter emissions rules will tighten supply of the metal. Gold edged lower.