The US Dollar Index gains as markets fully price a 25bp December Fed hike and US Treasury yields surge, with Deutsche Bank economists now forecasting an additional rate increase in January.
A stronger US CPI print and hawkish Fed rhetoric triggered a sharp repricing of Fed expectations, lifting the Dollar Index. December pricing rose from 21.0bps on Monday to 28.5bps this morning, a 25bp hike is fully priced with a 14% chance of 50bp, and US yields surged across the curve, all reinforcing Dollar strength.
The hawkish repricing of Fed expectations, with a fully priced 25bp December hike and 14% odds of 50bp, is weighing directly on EUR/USD. Surging US yields across the curve reinforce Dollar strength against the Euro, though no specific Eurozone data is cited as a counterweight.
The article states the clearest market impact was in US Treasuries, with yields surging across the curve after the hawkish repricing. The rate priced in for the September 2027 meeting rose +22.3bps, implying a full additional hike to next year's path, supporting higher yields.
The US Dollar Index climbed as a stronger CPI print and hawkish Federal Reserve rhetoric forced a sharp repricing of interest rate expectations. Markets now fully price a 25bp hike for December, with a 14% probability of a 50bp move, while US Treasury yields surged across the curve. Deutsche Bank economists have responded by adding a January rate hike to their policy outlook.
Markets now fully price a 25bp Fed hike in December, with a 14% chance of 50bp, after a stronger US CPI print and hawkish Fed rhetoric, and US yields surged across the curve, supporting the Dollar.
Markets now fully price a 25bp Fed rate hike in December with a 14% chance of a larger 50bp move, and US yields surged across the curve, strengthening the Dollar and weighing on EUR/USD.
A stronger US CPI print and hawkish Fed rhetoric led markets to fully price a 25bp December hike with 14% odds of 50bp, with the September 2027 rate up +22.3bps, sending yields higher across the curve.