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Expectations for a December Fed rate hike top 90%

EconomyNov 14, 2016 04:22AM ET
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© Reuters. Expectations for a December Fed rate hike top 90% - Market expectations for a rate hike at the Federal Reserve's December policy meeting topped 90% on Monday, amid growing optimism surrounding the effects of a Donald Trump presidency on the U.S. economy.

According to's Fed Rate Monitor Tool, odds for a rate hike at the Fed's December 13-14 meeting rose to 90.6%, up from 81.1% on Friday and compared to 71.5% in the days leading up to the election last week.

The U.S. dollar rallied to an 11-month high against a basket of major currencies on Monday, boosted by rising U.S. yields. The dollar index was recently up 0.95% at 99.93, after climbing to 100.03 earlier, a level not seen since December 2015.

Against the yen, the dollar was up 1.15% at 107.91, having risen to 107.96, its highest since June 3, while the euro was at 1.0751 after hitting the 10-month low of 1.0728 earlier in the day.

The greenback has been boosted in recent sessions amid optimism that increased fiscal spending and tax cuts under a Trump administration will spur economic growth and inflation, which would ultimately lead to an era of higher interest rates.

Meanwhile, the yield on the U.S. 10-year Treasury note was up 11.2 basis points at 2.229% in early morning trade in New York, after rising to as high as 2.238%, a level not seen since January 6. The yield on the 10-year note was below 1.8% in the days leading up to the election.

The 30-year yield gained 9.5 basis points to 3.009%, while the two-year yield rose 6.9 basis points to 0.976%.

U.S. yields have been on a tear following Donald Trump's U.S. election win last week, as traders reassessed the implications of a Trump presidency, with many seeing it ushering in higher economic growth and rising inflation.

After a historic week in which U.S. politics dominated market sentiment, investors will get back to the business of watching the Fed and economic data in the coming days.

Fed Chair Janet Yellen is due to testify on the economic outlook before the U.S. Congress Joint Economic Committee on Thursday, while retail sales and inflation data will also be in the spotlight.

Expectations for a December Fed rate hike top 90%

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