The benchmark 10-year U.S. Treasury bonds eased as its yield rose two basis points to 1.1105% after reports were released on the possibility of President-elect Biden could spend $2 trillion to boost the Covid-19 hit US economy. Analysts commented that this figure is much higher than what the market expected, and it had a corresponding effect on the 10-year treasury yields.

The US dollar has been strengthening recently with the dollar index moving up from a sub-90 level to nearly 91 presently as investors who are short dollars are expecting eventual stimulus tapering which might limit the greenback’s decline.

However, with the expected announcement from the President-elect that another $2 trillion will be injected into the economy, dollar bears who have been waiting in the sidelines will probably continue to short the USD in expectation of further weakening in the greenback.

In the meanwhile gold, which does not offer any yield, has declined due to higher Treasury yields. It is trading at $1840/oz presently, which is well below a two-month peak of $1,959/oz achieved a week ago.

Jin Yau

Country Manager
jyau@tvmarkets.com