Dollar eases as European yields pull back from highs
TLT•The dollar index slipped 0.08% to 102.17 as euro zone bond yields retreated from their highs; the euro rose 0.08% to $1.1204. Markets priced in a 17.2% chance of a Fed rate hike this month and an 81.2% chance of one in December.
1. Dollar and euro moves
The dollar retreated as a rise in euro zone bond yields stalled. The French 10-year yield was up 2.7 basis points at 4.8873%, after reaching 4.9685%; the euro recovered from an earlier low of $1.1171.
2. Fed rate expectations
Markets priced in a 17.2% chance of a Fed rate hike of at least 25 basis points this month, down from 24.4% a week earlier, and an 81.2% chance of a hike in December. Fed Governor Christopher Waller said further increases will likely be needed to bring inflation to the 2% target, but left open the possibility of an October pause.
3. US jobless claims
Weekly initial jobless claims fell by 2,000 to 197,000, below economists’ estimate of 200,000. Goldman Sachs analysts continued to expect one additional 25-basis-point hike in December and said Waller’s comments represented a hawkish shift.
