U.S. dollar climbs as Yields reach two-week highs - Biden plans new spending
U.S Treasury yields hit two-week highs on Thursday after President Joe Biden proposed trillions of dollars in new spending, and as data showed American economic growth accelerated in the first quarter.
Biden late on Wednesday proposed spending $1.8 trillion on education and childcare, which would be financed by raising the top marginal tax rate for the wealthiest Americans.
That is on top of a $2 trillion jobs-and-infrastructure plan to be paid for by raising taxes on U.S. companies.
Market participants are concerned that Treasury issuance will need to increase to pay for the spending.
Yields also rose after the Commerce Department said gross domestic product increased at a 6.4% annualized rate last quarter.
Benchmark 10-year note yields reached 1.690%, the highest since April 13, before fading back to 1.640%, up two basis points on the day. They have risen from 1.531% last week but are holding below one-year highs of 1.776% reached in March.
Inflation expectations hit eight-year highs of 2.46%, before falling back to 2.43%, based on breakeven rates on 10-year Treasury Inflation-Protected Securities (TIPS).
U.S. dollar climbs from nine-week low in step with higher Treasury yields
In afternoon trading, the dollar index, a gauge of the greenback’s value against six currencies, rose 0.1% to 90.596. Earlier, the index hit its lowest level since Feb. 26. The earlier dip in the dollar also drove the euro to a nine-week high, though the single currency has since stabilized to around $1.2116, down 0.1%.
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