The US dollar and Treasury yields stabilised to some extent on Thursday after tumbling in the two previous sessions.
Yesterday’s release of June’s Producer Price Index echoed Tuesday’s softer-than-expected June Consumer Price Index, and together the two reports pulled yields and the dollar lower as inflation concerns abated to some extent.
US producer prices fell 0.3% month-on-month in June, missing expectations for an unchanged reading and posting the first monthly decline since August 2025. Core producer prices rose 0.2%, but remained below the consensus.
The cooler inflation readings saw Federal Reserve interest rate hike bets trimmed, though markets still price in one increase by year-end, which could keep yields and the dollar underpinned. Markets could continue to monitor incoming data for confirmation of a sustained disinflation trend, while ongoing Middle East tensions threaten to push oil prices higher again and with it inflation concerns.
Attention now turns to today’s initial jobless claims data, which could affect monetary policy expectations. Meanwhile, tensions in the Middle East could continue to fuel safe-haven demand for the US dollar, limiting downside risks. Any escalations on this front could push the dollar and yields higher.
Leave a Comment