A record $1.2 trillion was wiped off global bonds last week
Gold touches 5-month low on speculation U.S. rates to rise
Nov. 14, 2016 (Bloomberg) -- Routs in global bonds and emerging markets intensified, while the dollar climbed as investors positioned for the wave of U.S. fiscal stimulus that President-elect Donald Trump has pledged to unleash.
The yield on 30-year Treasuries rose to the highest since January, with last week’s record debt selloff bleeding into Monday trading and weighing on credit markets. The Bloomberg Dollar Spot Index advanced to a nine-month high as the U.S. currency strengthened versus almost all its major counterparts. U.S. stocks fluctuated and shares in developing nations sank to a four-month low. Copper headed for the highest close in 16-months and oil fell with gold.
Trump’s election as U.S. President is sending shock waves through global markets on speculation his pledge to ramp up infrastructure spending will boost growth and inflation and trigger faster hikes in U.S. interest-rates. About $1.2 trillion was wiped off the value of bonds worldwide last week as equities added about $1 trillion and base metals soared by the most in four years. Emerging markets are being hit by an exodus of capital amid concern Trump will also implement more protectionist trade policies.
“Trump has introduced so much uncertainty -- around the fiscal outlook, the outlook for foreign demand for Treasuries given his protectionism and his views on China, uncertainty around the outlook for the Fed,” said John Davies, an interest-rate strategist at Standard Chartered Plc in London, which adjusted its forecast for 10-year Treasuries yields to 3 percent in the end of 2017 from below 2 percent previously. “There’s an uncertainty premium, rather than just expectations of much more Fed tightening,” being priced into Treasuries, he said. “We think there’s room for this to continue.”