Breaking News
Get 40% Off 0
👀 Reveal Warren Buffett's stock picks that are beating the S&P 500 by +174.3% Get 40% Off

Dollar hits six-mth peak, yields at 2008 highs on hawkish Fed

Published Sep 20, 2023 11:00PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
EUR/USD
+0.31%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
USD/JPY
+0.08%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
USD/ILS
-0.18%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
USD/IDR
+0.03%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DX
-0.26%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US2YT=X
0.01%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Investing.com-- The dollar hit a six-month high against a basket of currencies on Thursday, while U.S. Treasury yields hit multi-year peaks after the Federal Reserve warned that U.S. interest rates will remain higher for longer.

The dollar index and dollar index futures rose about 0.5% each in Asian trade, hitting their highest level since early-March after Fed Chair Jerome Powell flagged at least one more interest rate hike this year. 

While the Fed held rates steady on Wednesday, Powell said that the Fed will cut rates by a smaller-than-expected margin in 2024, amid a recent rise in U.S. inflation. 

Powell’s comments blindsided markets hoping for more monetary easing next year, triggering strong flows into the dollar and out of Treasuries. This saw the 10-year benchmark race to a 15-year high, while 2-year yields jumped to their highest levels since early-2001. 

The Fed’s hawkish outlook comes as U.S. inflation rose for the past two months, reversing a downward trend seen earlier this year. The readings, coupled with signs of a strong labor market and resilience in the U.S. economy, give the central bank more headroom to keep rates higher. 

U.S. rates are now seen at 5.1% next year, indicating only two rate cuts in 2024, as compared to initial expectations of at least four cuts. Such a scenario keeps rates close to the over 20-year highs they currently stand at.

The Fed still expects the U.S. economy to dodge a recession this year, thanks to relative resilience in consumer spending and labor activity. But the two factors also present more upside risks to inflation. 

Still, some analysts held out hope that the Fed will have limited headroom to actually enact more rate hikes. 

“The concern is that economic softness could go too far (as highlighted by some officials in the July FOMC minutes) and heighten the chances of recession. Given this risk and the encouraging signs seen on core inflation and labour costs, we think the data flow gradually weaken the case for a November or December rate hike,” ING analysts wrote in a note.

Despite the hawkish messaging, Fed Funds future rates show markets pricing in only an about 30% chance of a rate hike in November and December. But rate expectations will also be contingent on the path of inflation, a stance that was reiterated by the Fed.

Dollar hits six-mth peak, yields at 2008 highs on hawkish Fed
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email