5 Stocks To Buy As U.S. Dollar Surges To Three-Month High

On Tuesday, the U.S. dollar hit a new three-month high versus a basket of currencies. The rise of the greenback was primarily attributable to a surge in the 10-year Treasury yield which hit a more than four year high on Monday. This, in turn, was due to multiple factors, primarily the specter of rising inflation levels.

Meanwhile, a number of indicators show that the U.S. economy remains on a firm footing. The dollar’s surge and a strong U.S. economy would make domestically focused stocks better options than their multinational peers. Adding such stocks to your portfolio makes good sense at this time.

Bond Yield Spike Powers Dollar’s Ascent

On Monday, the 10-year yield touched 2.998%, its highest level in more than four years. This spike was a product of concerns emanating from mounting government debt, rising inflation and an increase in oil and commodity prices. The U.S. 10-year bond yield moderated marginally on Tuesday, falling to 2.964% in Asian trade.

The jump in 10-year bond yield increased the attractiveness of the U.S. dollar versus other currencies such as the Euro and Yen. The easing of trade-related concerns has also boosted the dollar. On Saturday, U.S. Treasury Secretary Steven Mnuchin stated that he was likely to visit China, a move which could go a long way toward reducing tensions with the United States.

U.S. Economic Growth Likely to Remain Strong

Meanwhile, analysts at Nomura (NMR) think the U.S. economy could expand substantially over 2018 and 2019. Recently instituted tax cuts and a rise in government expenditure are likely to fuel growth during this period. And evidence of such growth has become available even before the release of the first reading on first-quarter GDP on Friday.

Coming to recently released economic data, the leading indicators index increased by 0.3% in March. Also, the flash IHS Markit U.S. manufacturing PMI increased to 56.5 in April, marking a three-and-a-half-year high. Retail sales also rebounded in March, ending a losing streak of three back-to-back declines. Meanwhile, unemployment is static at a 17-year low even as wage increases inch higher.

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