Stocks, dollar fall as Treasuries gain

U.S. stocks failed to add to the best rally in two months as the Treasury yield curve flattened further, raising concern about economic growth. The dollar dropped as the yen and gold gained.

The S&P 500 Index slipped Friday to cap a second week of losses. The spread between two- and 10-year Treasury yields hit the tightest level in a decade. The greenback remained linked to political developments in Washington, where the Senate girded for negotiations on its version of tax reform. The risk-off tone comes before a week shortened by the Thanksgiving holiday in the U.S.

It’s been tumultuous week in the U.S. as shares saw the biggest gain and the largest drop in two months after touching records a week earlier. Investors are trying to gauge whether benchmarks will continue a march to alltime highs on strong earnings and faster growth spurred by corporate tax cuts or if they will be pulled down amid lofty valuations, the flattest yield curve in a decade and a selloff in junk bonds.

The odds American firms will get a tax break improved Thursday after the House approved its version of the legislation. The Senate is still debating its own plan, trying to reduce the 10-year debt impact below $1.5 trillion. Adding to the discussion, Federal Reserve Bank of Dallas President Robert Kaplan said Friday the government’s debt-to-GDP is possibly at unsustainable levels.

Elsewhere, bitcoin hovered under $8000. Commodities rebounded from the recent selloff. West Texas crude jumped to around $56 a barrel as Saudi Arabia moved to dispel doubts over Russia’s readiness to extend output curbs. The Japanese yen gained the most in more than two months against the dollar. Emerging market shares headed for the highest close in six years.