UST Rising Yields Send USD Higher Weighing Down On The Risk Appetite

 | Feb 21, 2018 02:56AM ET

The markets focusing increased again on the UST yields and their impacts of the global equities markets, after US started this week selling of UST worth $258b.

Yesterday, there were 4 auctions to underscore the current higher prospects of watching higher interest rate in US, as inflation is rising and the economy is expanding by higher rates fueled by adopting $1.5 trillion in tax cuts to take effect this year.

After ending the previous auction last Jan. 23 at 2.066%, UST 2-Year ended yesterday's auction with a 2.255% yield which is the highest since the credit crisis in 2008.

The yield from US 6-Month Bill Auction ended to rising to 1.82% from 1.785% on Feb. 12, US 3-Month Bill Auction ended to 1.63% yield from 1.57% and even The Auction of US 4-Week Bill ended at 1.38% from 1.36% a week earlier.

After the American equities recovery last week, The US blue chips ended their first session of the week yesterday down, as did the Japanese Nikkei 225 today, despite USD strength versus the yen on the interest rate outlook differential between US and Japan. USD/JPY is trading now near 107.80.

Under the pressure of the USD strength, EUR/USD retreated for trading now near 1.2320 ahead of the preliminary releases of EU PMI indexes of the manufacturing sector and service sector for February today which are expected to highlight the current synchronized global growth following the US which raised the interest rate outlook and the governmental yields curves globally.

The greenback which has been boosted by higher UST yields dragged gold, which has no yield, down to $1325 per ounce during the Asian session, despite the risk aversion which contained the market sentiment.

While the markets are waiting later today for the release of the recent FOMC meeting minutes which was the last under Yellen's leadership, Jan. 30 and 31.