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Wednesday, April 21, 2021

US bond yield spike weakens Sensex; Rupee snaps 2-day rally

US Treasury yields came roaring back on Wednesday after a brief consolidation at the start of the week.

By: ENS Economic Bureau | Mumbai |
March 5, 2021 3:00:49 am
The nearly 6 per cent rise in 10-year rates on Wednesday to around 1.5 per cent level drove the dollar higher against most major currencies.

DOMESTIC benchmark indices came under heavy selling pressure as global markets turned weak and US bond yields rallied again. The benchmark Sensex plunged 599 points, or 1.16 per cent, to 50,846.08 and the Nifty50 fell 165 points, or 1.08 per cent, to 15,080.75 in the sell-off.

US Treasury yields came roaring back on Wednesday after a brief consolidation at the start of the week. The nearly 6 per cent rise in 10-year rates on Wednesday to around 1.5 per cent level drove the dollar higher against most major currencies. “Domestic markets along with its global peers mirrored the wounded trend of the US market. The surge in US bond yields added selling pressure in technology stocks, forced Wall Street to close lower. Blue-chips were much affected by the weak global cues, but mid and small caps with its increased investor confidence retained its positive momentum,” said Vinod Nair, head-research, Geojit Financial Services.

The rupee on Thursday broke a two-day winning streak to decline by 11 paise to close at 72.83 against the US dollar due to a rebound in the greenback in overseas markets and muted domestic equities. At the interbank forex market, the local unit opened at 72.99 against the greenback and witnessed an intra-day high of 72.62 and a low of 72.99.

The specter of high US bond yields undermined low-yielding, safe-haven assets, such as the yen, the Swiss franc and gold. Benchmark 10-year US Treasury yield touched a session high of 1.535 per cent, and was last at 1.526 per cent.

At 11:29 a.m. ET, the Dow Jones Industrial Average rose 43.10 points, or 0.14 per cent, to 31,313.19 and the S&P 500 gained 1.98 points, or 0.06 per cent, to 3,821.

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