Published: Tue, April 24, 2018
Finance | By Cynthia Curry

United States stocks dip and bond yields set four-year highs

United States stocks dip and bond yields set four-year highs

The Treasury said that it wanted to mitigate the consequences for those affected by the sanctions because it wanted to target Russian oligarch Oleg Deripaska, Rusal's ultimate owner, and not "the hard-working people who depend on Rusal and its subsidiaries".

Shares in RUSAL surged nearly 15 percent on the Moscow Exchange following the news while global aluminum prices dropped nearly 1 percent.

Last week RIA Novosti, RT, NTV and other Kremlin faithful Russian media announced that Germany will ask the United States to exempt it from USA sanctions on Russia.

Companies now have until October 23 to end their business with Rusal, one of the world's largest aluminum producers, after US sanctions against the firm spurred chaos in metals markets.

With the threat of secondary sanctions on non-US parties being removed, more market participants are expected to be able to use Rusal metal, which was shunned when the US Treasury sanctioned the company.

Wood Mackenzie analysts say the decision provides "much-needed breathing space" for the aluminum market, and it "expect (s) near-term correction and volatility" in prices. The most-actively traded palladium futures in NY dropped 5.4%.

The US Treasury Secretary met with Russian Finance Minister Anton Siluanov during International Monetary Fund (IMF) meetings in Washington last week.

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Washington's clarification follows two weeks of chaos in global metal markets, during which manufacturers scrambled to secure supply. Deripaska's spokeswoman was not immediately available.

"This affects the whole production chain, all the way to auto producers and the aerospace industry, said one German expert".

The US Treasury this afternoon announced that investors - who previously were given until 5 June - now have until October 23 "to engage in specified transactions related to winding down or maintaining businesses" with Rusal and its subsidiaries.

Rusal produces about 6 percent of the world's aluminum and operates mines, smelters and refineries across the world from Guinea to Ireland and Russian Federation to Jamaica.

"Things have ground to a halt in terms of Rusal's dealings with major western companies", said Maximilian Hess, a senior political risk analyst at AKE International. "It looks as if there was a lot of pressure from the United States aluminum downstream industry", he told the news agency Bloomberg.

It's not clear whether the Treasury's moves on Monday will automatically allow worldwide companies to resume their deals with Rusal. Hasbro said it took a loss over the last three months, and its stock lost 0.9 percent to $82.14. The yield on the 10-year Treasury note continued to trade at four-year highs as it rose to 2.98 percent from 2.96 percent late Friday.

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