Bond Rout Hits Italy, U.S. Yield Surge Hammers Emerging Markets

by Jamie McGeever
Reuters UK

The global bond market rout continued on Friday, driving up Italian yields and hammering emerging markets as investors feared higher U.S. interest rates under incoming President Donald Trump will spark capital outflows from these assets.

With the U.S. Treasury market closed for Veterans’ Day, the bond selling centred on Europe, with Italy’s benchmark 10-year yield rising to its highest in a year before a key ratings review from Standard & Poor’s later in the day.

This followed a wave of heavy selling across emerging Asian stocks, bonds and currencies as investors bet that Trump’s fiscal policies will be inflationary, push U.S. rates up and drive investors into dollar-based assets.

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