Dollar soars on US yield gains, Asian shares wobbly
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The dollar vaulted to 13 1/2-year highs against a basket of major currencies as US bond yields rose, leaving Asian stocks vulnerable to potential rotation out of emerging markets to the United States. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3 percent in early trade to hover just above its four-month low touched earlier in the week. It looks set to log its fourth straight week of losses. The dollar's rise, however, was a boon for Japan's exporter-driven Nikkei average , which rose 0.9 percent to a 10-month high. On Wall Street, the benchmark S&P 500 index rose 0.5 percent to within a hair of its record high as bank stocks were boosted by bets on higher interest rates and consumer discretionary stocks were helped by favourable economic data and earnings. US consumer prices posted their biggest increase in six months, while housing starts surged to a 9-year high and jobless claims fell to the lowest level since November 1973.
All these data fit nicely into the current market's theme that US inflation is likely to accelerate under Trump administration's policies such as tax cuts, increased fiscal spending and more trade protection for domestic industries. The 10-year US Treasuries yield rose to 2.326 percent, its highest since January. The two-year US Treasuries yield rose to a 10 1/2-month high of 1.058 percent.
The dollar vaulted to 13 1/2-year highs against a basket of major currencies as US bond yields rose, leaving Asian stocks vulnerable to potential rotation out of emerging markets to the United States. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3 percent in early trade to hover just above its four-month low touched earlier in the week. It looks set to log its fourth straight week of losses. The dollar's rise, however, was a boon for Japan's exporter-driven Nikkei average , which rose 0.9 percent to a 10-month high. On Wall Street, the benchmark S&P 500 index rose 0.5 percent to within a hair of its record high as bank stocks were boosted by bets on higher interest rates and consumer discretionary stocks were helped by favourable economic data and earnings. US consumer prices posted their biggest increase in six months, while housing starts surged to a 9-year high and jobless claims fell to the lowest level since November 1973. 
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