U.S. Treasury yields are higher today, particularly in the long-dated tenors. The 30-year yield (4.469%) is now trading above the 2-year yield (4.462%) for the first time since January. Saturday’s assassination attempt on former president Trump has increased odds of him winning the general election in November, leading investors to adjust positions in anticipation of higher inflation (the ‘Trump Trade’), brought on by added tariffs and expanding fiscal policy.
Fed Chairman Powell speaks today at 12:30pm ET, his first public appearance following last Thursday’s better-than-expected CPI data which showed inflation continuing its retreat. Treasury prices surged following the CPI release, pressuring yields and raising the odds of a series of rate cuts beginning in September, eventually reducing the overnight rate by a full percentage point by January of next year. Traders will be monitoring Powell’s remarks for any sign of a pushback on the market’s rate cut expectations.
The U.S. Dollar Index is currently unchanged from Friday’s close after trading higher in the session. Spot returns for the dollar are mixed vs. the G10 but leaning overall to dollar strength: +0.82% vs. NOK, +0.71% vs. SEK, +0.39% vs. NZD, +0.39% vs. CAD. The dollar is virtually unchanged vs. EUR (-0.07%) and GBP (+0.08%).
Dollar gains vs. emerging market currencies are more pronounced: +1.69% vs. ZAR and +1.25% vs. MXN.
Bitcoin is +9.32% on heightened optimism for a Trump win in November.
The major U.S. Equity indexes are all higher today, led by the Nasdaq 100 gain of 0.68%. Crude oil prices are +0.02% (unusual low volatility for the commodity). Gold is +0.05% and silver -0.70%.
