21st February 2018 - UST rising yields send USD higher weighing down on the risk appetite

Walid Salah Eldin

Master Trader
Feb 15, 2016
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 the inflation is rising and the economic is expanding by higher rates fueled by adopting $1.5 trillion in tax cuts to take effect this year.

After ending the previous auction of it on last Jan. 23 at 2.066%, UST 2YR ended yesterday auction to 2.255% yield which is the highest since The credit crisis in 2008.

The yield of 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 to 1.38% from 1.36% a week earlier.

After the American equities recovery last week, The US blue chips ended yesterday their first session of the week down and also The Japanese Nikkei 225 lost 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, EURUSD retreated for trading now near 1.2320 ahead of the preliminary releases of EU PMI indexes of the manufacturing sector and service sector of February today which are expected to highlight the current synchronized global growth following 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 by God's will for the release of the FOMC recent meeting minutes which has been the last under Yellen's leadership on last Jan. 30 and 31.

Kind Regards

Global Market Strategist of FX-Recommends

Walid Salah El Din