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16 May 2018, 09:00 | Cesar Cruz
Daily June E-mini Dow Jones Industrial Average
USA equity markets closed solidly lower on Tuesday with the Dow industrials halting their eight-day advance.
After around three weeks of consolidating around the 3% mark, the 10 year Treasury yield has surged higher overnight - it is now up 8 bps at 3.08%, its highest level since 2011. That paves the way for higher borrowing costs on mortgages and other loans. Homebuilders fell sharply as a result.
The yield on the 10-year Treasury rose to 2.99 percent. The Dow is on track for a gain of 2.2 percent, while the S&P 500 is closing in on a gain of 2.4 percent.
The Dow lost 193 points, or 0.8 percent, to 24,706.
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Banks bucked the downward trend Tuesday and rose along with bond yields.
The Dow's eight-session winning streak came to an abrupt end as Treasury yields spiked, returning to multi-year highs.
The proximate trigger for the rise in yields was the release of U.S. retail sales data, which contained some upward revisions to prior months, and an Empire manufacturing survey that showed the highest prices paid component since 2011.
The yield curve steepened from near its flattest levels since 2007, with the spread between the 2 year and 10 year bond yields widening 5bps to 50bps. France's CAC 40 inched up 0.2 percent. The Nasdaq climbed 8 points, or 0.1 percent, to 7,411.
Stocks are opening moderately lower across the board on Wall Street, led by declines in technology and consumer-focused companies.
The yield on 10-year U.S. Treasury notes jumped to its highest level since July 2011, suggesting an uptick in inflation and sending the dollar index.DXY to its highest close in 2018, raising expectations for further interest rate hikes from the Federal Reserve. That yield is used to set interest rates on mortgages and other kinds of loans.
Among the S&P industry groups, the rate-sensitive real estate space ended at the bottom of the standings with a 1.7% loss, including a 3.8% rout in the iShares U.S. Home Construction ETF.
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