Investing.com - Here are the top five things you need to know in financial markets on Monday, November 14:
1. Global yields surge as bond sell-off continues
Global bond prices tumbled on Monday, pushing yields to multi-month highs as the post-U.S. election global sell-off in sovereign debt continued.
The yield on the U.S. 10-year Treasury note was up 14.8 basis points at 2.266% by 5:57AM ET (10:57GMT), after rising to as high as 2.267%, a level not seen since January 4.
Meanwhile, the 30-year yield gained 12.7 basis points to 3.040%, while the two-year yield rose 8.5 basis points to 0.992%.
U.S. yields have been on a tear following Donald Trump's U.S. election win last week, as traders reassessed the implications of a Trump presidency, with many seeing it ushering in higher economic growth and rising inflation.
Elsewhere, in Europe, yields on 10-year German Bunds were up by 7.3 basis points to 0.380%, the strongest since late-January, while the U.K.’s benchmark 10-year gilt yields were 11.5 basis points higher at 1.480%, surpassing the levels last held shortly before the Brexit referendum in June.
Bond prices and yields move inversely.
2. Expectations for a December Fed rate hike top 90%
Market expectations for a rate hike at the Federal Reserve's December policy meeting topped 90% on Monday, amid growing optimism surrounding the effects of a Donald Trump presidency on the U.S. economy.
According to Investing.com's Fed Rate Monitor Tool, odds for a rate hike at the Fed's December 13-14 meeting rose to 90.6%, up from 81.1% on Friday and compared to 71.5% in the days leading up to the election last week.
After a historic week in which U.S. politics dominated market sentiment, investors will get back to the business of watching the Fed and economic data in the coming days.
Fed Chair Janet Yellen is due to testify on the economic outlook before the U.S. Congress Joint Economic Committee on Thursday, while retail sales and inflation data will also be in the spotlight.
3. U.S. dollar index breaks above 100
The U.S. dollar rallied to an 11-month high against a basket of major currencies on Monday, boosted by rising U.S. yields and expectations for higher interest rates in the coming months.
The dollar index was recently up 0.85% at 99.83, after climbing by more than 1% to 100.03 earlier, a level not seen since December 2015.
Against the yen, the dollar was up 1.2% at 107.98, having risen to 108.00, its highest since June 3, while the euro was at 1.0760 after hitting the 10-month low of 1.0728 earlier in the day.
The greenback has been boosted in recent sessions amid optimism that increased fiscal spending and tax cuts under a Trump administration will spur economic growth and inflation, which would ultimately lead to an era of higher interest rates.
4. Emerging market rout deepens
A rout in emerging markets intensified on Monday, as investors feared higher U.S. interest rates under incoming President Donald Trump will spark capital outflows.
Emerging currencies, such as the Turkish lira, Brazilian real and South African rand remained on the defensive, weighed down by the specter of investor money being siphoned away by higher U.S. rates.
Emerging market currencies in Asia weren't spared, either, with the Chinese yuan, South Korean won, Indonesian rupiah, Malaysian ringgit and Singapore dollar also falling.
Emerging markets are being hit by an exodus of capital as speculation builds that the U.S. is heading into an era of rising interest rates and more protectionist trade policies under President-elect Trump.
5. Dow points to another all-time high as Trump rally set to resume
U.S. stock markets pointed to sharp gains at the open on Monday morning, with the blue-chip Dow futures rising 100 points to yet another all-time high on continued hopes that the policies of President-elect Donald Trump will deliver strong economic growth.
Last week, the Dow recorded its biggest weekly gain since 2011, while the S&P 500 saw its biggest weekly gain since October 2014. The Nasdaq Composite rose 3.8%, its biggest one-week jump since February.
Meanwhile, European and U.K. stocks were broadly higher in mid-morning trade, boosted by gains in the financial sector, as markets continued to digest Donald Trump’s election last week and the implications of his presidency for the U.S. economy.
Earlier, Asian shares closed mixed, with Japan’s Nikkei outperforming regional markets following stronger-than-expected economic data.
Government data in Japan showed that its third-quarter gross domestic product expanded an annualized 2.2% in the three months ended September, beating expectations of a 0.9% expansion.