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US bond yields hold near multi-month highs

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Bitcoin above $91,000, underpinned by Trump's return

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China's markets down despite Beijing's latest support

measures

(Updates at 1212 GMT)

By Samuel Indyk and Rae Wee

LONDON, Nov 14 (Reuters) -

The dollar rose on Thursday, while longer-dated U.S. bond

yields hovered near multi-month highs as investors bet that

President-elect Donald Trump's policies would fuel inflation and

keep interest rates higher for longer

European shares bounced from three-month lows after a number

of positive earnings updates, while bitcoin jumped back

above $91,000, having surpassed that level in the previous

session, turbocharged by Trump's return to the White House.

Bitcoin, the world's largest cryptocurrency, last traded

over 3% higher at $91,604, having already soared more than 30%

in the last two weeks.

In the broader market, traders responded to a U.S. inflation

print that was in line with expectations by adding to bets on a

Federal Reserve rate cut next month, though the monetary policy

outlook for 2025 and beyond was clouded by Trump's return to

office.

Trump's plan for lower taxes and higher tariffs is expected

to spur inflation and reduce the Fed's scope to ease interest

rates, buoying the dollar.

Edison Research also projected on Wednesday that the

Republican Party will control both houses of Congress when the

President-elect takes office in January, which would enable

Trump to pursue his agenda largely unhindered.

Uncertainty over potentially larger U.S. deficits and

stickier inflation was reflected in longer-dated U.S. bond

yields, which traded near multi-month highs on Thursday.

The benchmark 10-year Treasury yield peaked at

4.483% on Thursday, according to LSEG data, its highest since

July 1.

The 30-year yield hovered near a five-month peak

and last stood at 4.6249%.

"Even though we're not optimistic Trump's policies will be a

big boost to growth, they will increase indebtedness and boost

inflation and that could change the Fed's plans," said Nordea

chief analyst Jan von Gerich said.

On the shorter end of the curve, the two-year yield

, which typically reflects near-term rate

expectations, touched 4.324% but was last little changed on the

day at 4.2753%

Markets are now pricing in an 83% chance of a 25 bps rate

cut from the Fed next month, up from about 59% a day ago,

according to the CME FedWatch tool.

However, expectations of Fed cuts next year have been pared

back following Trump's election victory.

The dollar, meanwhile, pushed higher, ignoring the rising

bets of a Fed cut in December which would typically be negative

for the currency.

The dollar's rise pushed the euro to a one-year

low of $1.0496, its first time below $1.05 in over a year, and

broke above the 156 yen level.

The dollar index peaked at a one-year high of

107.07.

The Australian dollar fell 0.3% to $0.6453, further

pressured by a downside surprise on domestic employment.

SHARES MIXED

European share indexes were mostly higher, contrasting with

declines in Asia. U.S. stock futures were adding about

0.1%

The Euro STOXX 50 rose 1.5%, while the

broader STOXX 600 was up 0.8% after a number of

earnings reports, including from Europe's largest telecoms group

Deutsche Telekom and tech giant ASML.

British luxury name Burberry ( BBRYF )

topped gainers

in Europe after announcing a turnaround plan, rising almost

20% and set for its biggest one-day gain on record.

In contrast, MSCI's broadest index of Asia-Pacific

shares outside Japan fell 0.8%.

That came on the back of a fall in Chinese stocks after

Trump nominated China hardliner Marco Rubio to be his secretary

of state, signalling that a more hawkish stance towards Beijing

could extend beyond tariffs.

The mainland CSI300 blue-chip index fell 1.7%,

while the Shanghai Composite Index fell a similar

amount.

Hong Kong's Hang Seng Index slid 2%.

"The Trump administration is taking shape and the names

that are popping up are not doing anything to moderate

expectations on what he'll deliver," said Nordea's von Gerich.

Separately, investors have been left unimpressed by

Beijing's latest support measures to shore up China's ailing

economy, after the finance ministry unveiled tax incentives on

home and land transactions on Wednesday.

China's property market is grappling with a prolonged

downturn since 2021 and remains a major drag on the world's

second-largest economy.

"If you're considering buying a house or in the market for

one, it helps, certainly. But it's not going to change the

situation itself," said Alvin Tan, head of Asia FX strategy at

RBC Capital Markets.

"It's not going to galvanise a lot of people to start

(buying) homes. The inventory overhang is still there."

In line with the declines across Asia, Japan's Nikkei

erased early gains to last trade 0.5% lower.

Elsewhere, oil prices edged higher. Brent crude futures

were up 0.5% at $72.65 a barrel, while U.S. West Texas

Intermediate crude (WTI) futures traded at $68.77.

Spot gold fell 0.8% to its lowest level in two months

at $2,537 an ounce.