Policy Path: Bond Markets and Debt Surge

policy path: Bond markets saw yields on short-term US debt surge to the highest since 2009, sending the dollar to peaks last seen in early 2003, which in turn prompted China central bank to set the yuan at its weakest level against the greenback since 2008, according to Nine News Australia. The Fed anticipated policy path, and expectations US President-elect Donald Trump will get growth motoring, are keeping emerging markets on edge as capital gets sucked from more fragile, export-dependent economies toward dollar-based assets. European shares got off to a solid start with banks up almost 2 per cent, cheered by the prospect of a boost from higher rates to their lending profits, but the main action was elsewhere. The Fed rate rise of 25 basis points to 0.5-0.75 per cent was well flagged but investors were spooked when the dot plots of members projections showed a median of three hikes next year, up from two previously. It wasnt just the move in the dots, it was the language that was used. You had the Fed come in and be a bit more hawkish that many people, including us, were expecting, said TD Securities head of global strategy Richard Kelly. (news.financializer.com). As reported in the news.