* US yield of 10 years peaks in 13 months
* Gold little change, bitcoin dips
* Crude slips to two strong weekly gains (update prices, comments)
NEW YORK, March 12 (Reuters) – A stock index around the world fell on Friday but would reach its strongest weekly gain in five, while Treasury benchmarks rose to a 13-month high, partly optimistic after a $ 1.9 billion recovery package has been signed into law.
Profits in the stock markets in Shanghai and Tokyo were difficult to match in Europe and Wall Street, where banks were the silver lining and the Nasdaq underperformed as the revolution in value continued. The Dow Industrials reached a record high.
The rise in treasury yields supported the dollar, while the sell-off in shares shed light on the greenback’s safe haven.
Against the backdrop of an extremely loose monetary policy, some analysts expect inflation to increase as the explosion of vaccines leads to the reopening of economies, leading to concerns that the stimulus package could overheat the US economy.
U.S. President Joe Biden signed the stimulus legislation before giving a televised speech Thursday night in which he promised aggressive action to speed up vaccinations and move the country closer to normal by July 4th.
“We’re back to the idea that more growth is more inflation and that investors are a little nervous about current return levels affecting technology stocks,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments in Houston.
“It’s all about the pace at which yields are growing and that the market looks comfortable with another 10-20 basis points in the benchmark yield if supported by strong data showing economic recovery.”
The Dow Jones Industrial Average rose 233.39 points, or 0.72%, to 32,718.98, the S&P 500 lost 3.36 points, or 0.09%, to 3,935.98 and the Nasdaq Composite lost by 111.26 points, or 0.83%, to 13,287.42.
The pan-European STOXX 600 index lost 0.26% and MSCI shares rose 0.17% worldwide.
Emerging market shares lost 0.76%. MSCI’s broadest index of Asia-Pacific stocks outside Japan closed 0.69% lower overnight, while Japan’s Nikkei rose 1.73%.
U.S. ten-year treasury yields rose above 1.6% and were on track to achieve their seventh consecutive weekly rise.
“The bias in rates is still higher than an unforeseen setback on the vaccines or explicit Fed action,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities in New York.
U.S. producer prices reached their biggest annual profit in nearly 2-1 / 2 years in February, but still high unemployment could make it harder for businesses to pass on the higher costs to consumers.
Benchmark 10-year notes last fell 30/32 in price to yield 1.6317%, up from 1.527% late on Thursday.
The recent, sharp, market movements give the US Federal Reserve even more importance next week for clues to its view on rising yields and the threat of inflation.
In foreign exchange markets, the dollar index rose 0.244%, with the euro up 0.28% to $ 1,1951.
The Japanese yen weakened 0.51% against the greenback at 109.04 per dollar, while Sterling last traded at $ 1.3923, up 0.48% on the day.
The markets are likely to remain volatile in the second quarter, especially for the dollar, which was much stronger than expected at the beginning of the year, said Cliff Zhao, chief strategist at China Construction Bank International.
“The strong US dollar may weigh on some liquidity conditions in emerging markets,” he said.
The Institute of International Finance on Thursday called on the Fed to provide guidance on managing higher yields to prevent even more outflows from emerging markets.
Oil prices have fallen while both Brent and WTI have struggled to keep weekly performance in a positive area after rising more than 10% over the past two weeks.
On Friday, U.S. crude oil fell 0.53% to $ 65.67 a barrel and Brent was at $ 69.22, down 0.59% on the day.
Spot gold added 0.1% to $ 1,722.56 per ounce. Silver fell 0.79% to $ 25.87.
Bitcoin last fell 1.43% to $ 56,947.33.
Reporting by Rodrigo Campos; additional reporting by Shashank Nayar and Medha Singh in Bengaluru, John McCrank and Gertrude Chavez-Dreyfuss in New York, and Shadia Nasralla in London Edited by Nick Zieminski