Emerging markets feel the heat of speculation around faster US inflation
London — The dollar hit an 11-month peak on Monday as the risk of faster domestic inflation and wider budget deficits if Donald Trump goes on a US spending binge sent treasury and other benchmark global bond yields ever higher. It was a painful mix for assets in many emerging-market countries. Currencies from the Mexican peso to the Malaysian ringgit fell to new lows, but for European share markets it made for a strong start to the week. The pan-European Stoxx 600 index rose 1.1%, underpinned by gains among banks on the hope higher interest rates will help their profits and mining companies, which have been cheering Trump’s promise of major infrastructure spending. The reflation trade also saw futures for the S&P 500 and Dow Jones industrial add another 0.5% after the Dow chalked up best week in five years last week. The dollar bounded towards ¥108 and hit the eye-catching 100 threshold against a basket of currencies in brisk trade. That took the pace off a resurgent sterling and sa...
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