Dollar gains traction as Fed speakers warn of risks from inflation
TLT•The dollar held near a two-week high after hotter-than-expected US inflation and hawkish Fed comments lifted rate-hike bets. Futures implied a 91.9% chance of a 25-basis-point hike next month, while the 10-year Treasury yield rose 13.8 basis points to 4.996%.
1. Dollar holds gains
The dollar index was steady at 102.22 in early Asian trade, near its highest level since October 28, after rising 0.5% on Tuesday. October consumer prices increased more than expected, with higher food and accommodation costs.
2. Rate-hike bets firm
Comments from voting Federal Reserve officials signalling concern about high inflation strengthened expectations for further rate hikes. Fed funds futures implied a 91.9% chance of a 25-basis-point hike at the meeting concluding December 9, up from 84% a day earlier; markets priced out a pause and assigned a 9.1% chance to a 50-basis-point move.
3. Yields and currencies
The US 10-year Treasury yield rose 13.8 basis points to 4.996%. The euro and British pound were flat at $1.1168 and $1.3345, respectively, while the dollar was unchanged at 158.715 yen.
