Stocks, the dollar and bond yields all drifted lower on Monday as investors cashed in on some of their recent bets that the anticipated fiscal boost from the incoming Trump administration will support riskier assets at the expense of bonds.
A wild ride for bond markets since the U.S. election has re-ignited concern about a liquidity crunch in parts of the exchange-traded funds market, home to a small but fast-growing slice of global assets.
U.S. and European government bond yields, the main driver of global borrowing costs, hit their highest since June on Monday as questions mounted about how the world's big central banks could react to a sudden bout of inflation.
Puerto Rico's power authority, PREPA, avoided default on Wednesday by making a $415 million bond payment partly financed by insurers that backed the bonds, but creditors cautioned they would take legal action if restructuring negotiations with the utility over its $9 billion debt deteriorate.
The euro dived back below $1.12 on Tuesday after European Central Bank officials said the bank could take further action to lower euro zone bond yields and boost inflation, potentially flooding the market with yet more euros.