U.S. bond yields surge to a one-year high

U.S. bond yields surged to the highest in a year while American stocks climbed to records as optimism over the economic recovery continued to ripple through markets.

The yield on the benchmark 10year Treasury note increased as much as nine basis points to 1.30 percent, the highest since February 2020. Global bonds extended the worst start to a year since 2013.

The S&P 500, the Nasdaq composite and the Dow Jones industrial average indexes all set records Tuesday, before easing from the highs. The MSCI benchmark for emerging and developed market stocks snapped an 11session winning streak.

The reflation trade is powering assets tied to economic growth and price pressure, including commodities and cyclical stocks. At the same time, investors are riding a wave of speculative euphoria from penny stocks to bitcoin amid abundant policy support.

Stocks

The S&P 500 fell less than 0.1 percent as of 4:01 p.m. in New York. It has added 4.7 percent in 2021. The Russell 2000, which has surged 15 percent this year, edged lower.

In Japan, the Nikkei 225 Stock Average extended its advance past the 30,000 level. European markets were mostly little changed after a rally on Monday.

Commodities

Brent oil is holding near a 13month high after freezing temperatures hindered the Texas power system and disrupted crude production. Nearly 5 million people across the U.S. were plunged into darkness as homes and businesses lost power. Natural gas futures for March delivery surged as much as 10 percent.

In metals, copper climbed to the highest since 2012 and tin extended a dramatic surge. Citigroup forecasts that copper prices will rally to $10,000 a ton in six to 12 months on a better-than-expected recovery in demand.

Bonds

Global debt markets are extending a sell-off as investors shift money to riskier assets. German bunds and U.K. gilts saw benchmark yields rise. The Treasury 30year equivalent pushed above 2 percent.

Currencies

The dollar strengthened against most of its major peers. The pound edged higher to $1.3911.

Bitcoin crossed a new milestone, surpassing $50,000 as the blistering rally continues to captivate investors prompted by a Tesla investment.