US Treasury Yields Rise, Oil Falls on Ukraine Peace Hopes

New York, March 14 (Reuters) – U.S. Treasury yields hit two-and-a-half-year highs on Monday as oil prices tumbled as investors weighed positive comments from ceasefire talks between Russia and Ukraine along with expectations of a first rate hike. by the US Federal Reserve.

Russian and Ukrainian officials on Sunday gave their most optimistic assessments of the progress of their talks to end the conflict, with some delegates saying draft agreements could be reached within days. Read more

European stocks closed higher on Monday on muted hopes of progress in peace talks while oil prices fell to their lowest level in two weeks on the prospect of increased global supply.

“Everything seems to be heading towards a tipping point where we should have progress. The point is that neither side has a complete advantage and therefore the talks are the most sensible outcome, with some type of resolution,” said Thomas Hayes, chairman of Great Hill Capital in New York.

Investors expect the US central bank to hike rates more aggressively this year, after data on Thursday showed annual inflation in February rose at the fastest pace in 40 years, forcing Americans to dig deeper to pay rent, food and gas. Read more

Benchmark US 10-year yields hit 2.1099%, the highest since July 2019.

“The Fed is expected to raise rates by 25 basis points (this week) and you see yields at 10 rising, which is positive from a yield curve perspective and implies that the flattening may be coming to an end. We can avoid a near-term reversal and recession,” Hayes said.

The pan-European STOXX 600 index (.STOXX) rose 1.24% while the MSCI gauge of stocks across the world (.MIWD00000PUS) lost 0.24%. Overnight in Asia, the Nikkei 225 index (.N225) closed up 0.58%.

On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.66% to 33,161.13, the S&P 500 (.SPX) lost 0.06% to 4,201.92 and the Nasdaq Composite (. IXIC) fell 1.18% to 12,692.11.

By early afternoon, Brent crude futures were down 6.57% at $105.27, U.S. West Texas Intermediate (WTI) crude was down 6.4% at 102.34 $ per barrel.

The US dollar fell slightly against a basket of currencies on Monday, but held near a 21-month high last week, helped by hopes for peace between Russia and Ukraine. Read more

The dollar index fell 0.21%, with the euro up 0.59% at $1.0973.

Gold prices fell as US Treasury yields rose. L3N2VH0NN

Spot gold fell 1.3% to $1,959.62 an ounce, while US gold futures fell 0.9% to $1,964.70 an ounce.

Reporting by Chibuike Oguh in New York; Editing by Emelia Sithole-Matarise

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