Forexlive Americas FX news wrap 21 May: Higher US yields worry markets.30Y at new ’25 high

Economic news was light today, with the only U.S. release being weekly mortgage applications, which declined in response to higher interest rates. In Canada, April’s New Home Price Index fell 0.4%, adding to signs of continued housing market softness.

On the energy front, the EIA weekly inventory report showed a surprise build in crude oil stocks of +1.328M barrels, compared to expectations for a -1.277M drawdown. This mirrored the private API data released late yesterday, which showed an even larger build of +2.499M. Gasoline and distillate inventories also posted modest builds (+0.816M and +0.579M, respectively), defying expectations for drawdowns and surprising markets, especially after the API data had hinted at tighter supply.

There were no Federal Reserve speakers on the docket, leaving the spotlight on bond yields, which surged sharply. The 10-year Treasury yield rose 10.3 basis points to 4.584%, hitting its highest level since February. On the hourly chart, a dip in yields found support at the 200-hour moving average, helping to preserve the upside bias.

Meanwhile, the 30-year yield jumped 11.1 basis points to 5.079%, reaching its highest level since November 2024, after touching an intraday high of 5.098%.

Two key catalysts drove the move higher in yields:

1. A weak 20-year bond auction, which tailed by 1.2 basis points and showed below-average demand—particularly from domestic buyers.

2. Renewed deficit concerns tied to the administration’s “Big Beautiful Tax Deal”, which is expected to add significantly to the national debt. Coming on the heels of the recent Moody’s downgrade, the plan underscores the government’s strategy of relying on 3% GDP growth rather than spending cuts to manage fiscal imbalances.

Equity markets were volatile. The S&P 500 and NASDAQ initially clawed back early losses to trade briefly in positive territory, but reversed sharply lower into the close alongside the spike in yields.

📉 U.S. Market Close:

• Dow Jones: −816.80 points (−1.91%) to 41,860.44 (intraday high: −237.97)

• S&P 500: −95.85 points (−1.61%) to 5,844.61 (session high: flat)

• NASDAQ: −270.07 points (−1.41%) to 18,872.64 (session high: +98.70)

💱 Forex – U.S. Dollar Ends Lower Across the Board:

Despite some intraday recovery, the USD finished lower versus all major currencies:

• EURUSD: +0.35%

• USDJPY: −0.55%

• GBPUSD: +0.16%

• USDCHF: −0.36%

• USDCAD: −0.42%

• AUDUSD: +0.19%

• NZDUSD: +0.17%

The dollar did close off its lows, but the tone remained broadly negative as falling auction demand and fiscal fears weighed on sentiment.