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US Treasury sells $70B in 5-year bonds at 3.983% yieldThe United States Department of the Treasury has auctioned off $70 billion in 5-year bonds at a high yield of 3.983%, the department showed on Monday.The auction was finalized with a bid-to-cover ratio of 2.31, indicating weaker demand compared to the previous 2.39. Moreover, the auction's median yield stood at 3.920%, while the low yield was 3.800%. The allotment at the high yield stood at 67.80%.Direct bidders accepted 29.50% of the issuance, up from the 6-month average of 18.9%, and the indirect bidders secured 58.28%, down from 70.1%. The US 5-year Treasury yield gained 1.8 basis points to 3.97% at 2:34 pm ET after the auction.
Euro suffers steepest one-day drop against dollar since May after US-EU dealInvestors bet long-awaited trade agreement will hurt the European economySpeaking in Scotland on Monday, Donald Trump said he planned to set a tariff rate of up to 20% ‘for essentially the rest of the world’, referring to countries that do not strike specific trade agreements with the US © TOLGA AKMEN/POOL/EPA/ShutterstockThe euro suffered its steepest one-day drop against the dollar since May on Monday, as Germany and France voiced fears that the long-awaited EU-US trade deal would hurt the European economy.The single currency was down more than 1 per cent against the dollar and weakened by 0.8 per cent against the pound, following the announcement on Sunday that the US would impose 15 per cent tariffs on most imports from the EU.The agreement, hailed by European Commission president Ursula von der Leyen as “the biggest trade deal ever” and covering nearly 44 per cent of global GDP, averted a possible transatlantic trade war.But German chancellor Friedrich Merz said on Monday that the new tariffs would cause “considerable damage” to his country’s economy, Europe and the US itself.“Not only will there be a higher inflation rate, but it will also affect transatlantic trade overall,” he said. “This result cannot satisfy us. But it was the best result achievable in a given situation.”French prime minister François Bayrou said the trade deal marked a “dark day”, adding that the EU had “resigned itself into submission”.European stocks relinquished earlier gains on Monday as the initial relief that a deal had been struck was replaced by concern over its impact on the Eurozone economy.Germany’s Dax closed 1.1 per cent lower while France’s Cac 40 lost 0.4 per cent. Tariff-exposed car industry stocks on the region-wide Stoxx Europe 600 fell 1.8 per cent, having risen by a similar amount at Monday’s open.The euro remains 12 per cent higher against the dollar for the year so far, boosted by Germany’s planned defence spending plans as well as broader investor hopes that Donald Trump’s America First policies will encourage a wave of economic stimulus in the Eurozone.Sunday’s deal secured a lower tariff rate for the EU than the 30 per cent that the US president had threatened to impose from August 1.But the duties still mark a threefold increase from the average tariffs imposed on the bloc by the US before Trump’s “liberation day” announcements in April.The industry body for EU steel producers said a 15 per cent American tariff on most imports from the bloc would add a “huge burden” on its members.The US Chamber of Commerce in the EU welcomed the deal, saying that it “provides relief” to businesses.But it added that the 15 per cent tariff rate “still marks a significant increase in the cost of trading” and that more sectors should be included in the agreement’s zero-for-zero tariff list.The White House says the deal “achieves historic structural reforms and strategic commitments that will benefit American industry, workers, and national security for generations”.As Europe’s leaders reacted to the deal, Spain’s Prime Minister Pedro Sánchez said he supported it “but without any enthusiasm”.Far-right parties in France and Germany argued that the deal exposed the weakness of the bloc.Alice Weidel, co-leader of Germany’s Alternative for Germany party, posted on X that the deal was “not an agreement, but a slap in the face to European consumers and producers!”The reaction to the agreement came as Trump and Starmer met at the US president’s Turnberry golf course in Scotland to discuss the UK’s own trade agreement with the US, as well as the wars in Ukraine and Gaza.Speaking in Scotland on Monday, Trump said he planned to set a tariff rate of up to 20 per cent “for essentially the rest of the world”, referring to countries that do not strike specific trade agreements with the US.He added that he planned to announce pharmaceuticals tariffs “in the near future”.