The Greenback Rises, Yields Fall as S&P Drops Negative Rating on U.S.

“NEW YORK (Reuters) – The dollar rose again the yen and U.S. bond yields neared 14-month highs on Monday on improved sentiment toward the U.S. economy after rating agency Standard & Poor’s dropped its negative credit outlook for U.S. government debt.

S&P upgraded the U.S. credit outlook to “stable” from “negative,” saying the chances of a downgrade of the country’s rating is “less than one in three.

The dollar extended gains versus the yen to hit a session high, while prices for long-dated Treasury debt slipped, continuing a selloff sparked by uncertainty over when the Federal Reserve would begin scaling back bond purchases.

The 30-year bond’s yield rose to its highest since April 2012 after the S&P revision, while the 10-year note’s yield touched 2.20 percent for just the second time since then.

German Bund futures fell to a three-month low with the September Bund futures contract settling down 54 ticks at 142.85, its lowest since mid-March.

Analysts and investors said the S&P news was unlikely to spur a sharp rally or impact speculation about when the Fed might ease back on its bond buying, but added to generally upbeat sentiment about the outlook for the U.S. economy….”

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