"The strength in yields reflects a repricing of monetary policy expectations, providing a firmer foundation for the currency. Recent US data have reinforced the narrative of economic resilience. Industrial production surprised to the upside, durable goods orders signalled sustained business investment momentum, and housing indicators pointed to continued demand. Together, these data releases challenge the view that monetary policy is weighing on activity."
"The latest Federal Reserve minutes added a further cautious undertone. While no immediate hike is expected, several policymakers acknowledged that rates could move higher again should inflation stall or reaccelerate. That conditional tightening bias prompted markets to scale back expectations of interest rate easing, with pricing now centred on two rate cuts this year."
The dollar paused near one-week highs after advancing in the previous session, supported by a renewed rise in treasury yields across the curve. Yield strength reflects a repricing of monetary policy expectations and provides a firmer foundation for the currency. Recent US data showed industrial production surprising to the upside, durable goods orders signalling sustained business investment momentum, and housing indicators pointing to continued demand. Federal Reserve minutes conveyed a cautious tone, noting that rates could move higher if inflation stalls or reaccelerates, which shifted market pricing toward fewer interest rate cuts this year. Upcoming jobless claims, PCE inflation, and GDP readings will influence yields and dollar direction.
Read at London Business News | Londonlovesbusiness.com
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