US Treasury Yields Surge, Dollar Gains Against Canada

US Treasury yields have surged to multi-decade highs, pushing the dollar higher against Canada. On Monday, the 10-year Treasury yield rose to 5.238% and the 30-year hit 5.566%, making US dollar-denominated assets more attractive.

This increase in long-term yields has tightened financial conditions by raising the 'discount rate' investors use to value future cash flows. As a result, assets with most of their value far in the future are taking a hit, and gold is one example.

Since gold doesn't generate income, higher bond yields increase its opportunity cost, making it more expensive for non-US buyers when the dollar is strong. The Comex December gold price fell 3.6% to $4,167.50 an ounce on Monday.