Dollar pulls back from 18-month high as Treasury yields fall; Fed hike bets ease
TLT•The dollar slipped 0.2% from an 18-month high as falling Treasury yields and cautious Fed comments tempered expectations for an October rate hike. The 10-year Treasury yield reached 5.0892%, while the 30-year yield dipped to 5.4319%.
1. Dollar retreats
The dollar index fell 0.2% to 102.03 after hitting an 18-month high on Wednesday following stronger-than-expected US inflation data. The euro and sterling each gained 0.5%, while the Australian dollar fell 0.6% after Australian employment unexpectedly declined in September.
2. Rate expectations ease
Treasury yields fell, with the 10-year yield at 5.0892% and the 30-year yield at 5.4319%, both around three-week lows. Market pricing for an October Fed rate hike had risen to 50% after the inflation data, but comments from Fed officials, including Michelle Bowman and Mary Daly, tempered those bets. Investors were watching US producer prices and retail sales, due later in the day, and remarks from Fed Chair Kevin Warsh on Friday.
