USD Marches Forward Treasuries and EM Stocks Lose Ground

Treasuries declined with emerging-market equities while the dollar rallied amid speculation that U.S. interest rates will rise sooner than policy makers signaled. U.S. stocks fluctuated.

The yield on 10-year Treasury notes rose three basis points to 2.53 percent at 10:09 a.m. in New York. The Standard & Poor’s 500 Index lost 0.1 percent after two days of declines. The MSCI Emerging Markets Index fell the most since April. Germany’s 10-year bund yield climbed six basis points to 1.06 percent while the Stoxx Europe 600 Index was little changed. The Bloomberg Dollar Spot Index rose 0.3 percent and Brent crude slid to the a 17-month low.

BlackRock Inc., the world’s biggest money manager, is among investors speculating that an improving labor market and signs of inflation may justify sooner-than-forecast rate increases by the Federal Reserve. Data this week may show that claims for unemployment benefits fell, retail sales improved, and consumer confidence rose, strengthening the case for higher rates next year. Chinese Premier Li Keqiang announced money-supply growth that was the slowest in five months.

“The concern of the day is whether the Federal Reserve changes its timing of interest-rate moves to the upside,” Dan Veru, chief investment officer at Fort Lee, New Jersey-based Palisade Capital Management, said by phone. The firm oversees more than $5 billion in assets. “Investors are in the stock market because there are few other alternatives, but they’re ready to turn on it.”

The S&P 500 dropped the most in a month yesterday and closed at its lowest level since Aug. 22 after a two-day decline of 1 percent.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza