Dollar recedes from 18-month high as bond rally tempers hot inflation data
TLT•The dollar index fell 0.45% to 101.99 after reaching an 18-month high, as a rally in government bonds and cautious comments from Federal Reserve officials tempered the impact of strong US inflation data. Traders saw a 73% chance the Fed would leave rates unchanged at its October 27-28 meeting, up from 53% a month earlier.
1. Dollar pulls back
The dollar retreated from an 18-month peak on Thursday as investors weighed strong US inflation and spending data against a rally in government bonds. The dollar index fell 0.45% to 101.99, while the euro gained 0.56% to $1.1218.
2. Inflation and rate bets
US producer prices recorded their biggest rise in 4-1/2 years in September, and retail sales increased more than expected. Traders saw a 73% chance that the Federal Reserve would leave rates unchanged at its October 27-28 meeting, compared with 53% a month earlier; bets eased after officials said the central bank could wait for more clarity.
3. Bond rally and AI concerns
Renewed concerns about AI companies’ debt burdens fueled safe-haven flows into Treasuries, while a selloff in chip stocks helped support bonds and keep yields in check. Investors were also watching for comments from Fed officials, including Chair Kevin Warsh, at the IMF-World Bank annual meetings.
