Economist's Insights

Today’s Trading – Dollar Erases Post-Election Gains as Treasury Yields Fell with U.S. Stocks

May 16, 2017

Treasurys rallied Tuesday, reversing an overnight rise that peaked as U.S. markets opened. The daily low yield coincided with the bottom for the major U.S. equity exchanges. Stocks quickly erased an opening jump, falling as much as 0.3% before trimming the those losses to essentially nil. Utility companies were the worst performing sector while technology companies continued to flex their muscles. The S&P’s tech sector gained 0.5%, is up 6% since Q1 earnings season began, and extended its year-to-date gains to nearly 18%. The Nasdaq gained 0.3% to set its 33 record high of 2017. Crude prices moved lower with stocks, turning negative around lunch and extending its losses after hours on a prediction from API that weekly crude inventories grew by more than 800k barrels. Analysts were expecting a 2.4 million barrel draw. The Dollar’s downshift never let up and the currency ended down 0.7% on the day; the greenback is down 1.4% since last Thursday and has now completely erased its post-presidential election gains. The 2-year Treasury yield was unchanged at 1.30% while the 5-year yield fell 1.3 bps to 1.85% and the 10-year yield dropped 1.8 bps to 2.33%.