U.S Treasury yields Sink on Dovish Outlook

By: fxleaders|2025/05/16 10:15:06
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The dollar dropped Friday along with US Treasury yields as bets on additional rate cuts this year were solidified by negative surprises in US economic data this week. Although the dollar dropped 0.1 percent against a basket of currencies to 100 pc, its sharp 1 pc increase on Monday put it on track for a slight weekly gain of 0.3 percent. Markets are now pricing in about 56 basis points of Fed cuts by December, up from 49 basis points the day before. The benchmark 10-year US Treasury yield continued to decline 7 basis points overnight, closing slightly lower at 4 points 4413 percent. The yield for two years dropped 1 basis point to 3.9608 percent. Fed Chair Jerome Powell stated that policymakers believe their current monetary policy approach needs to reevaluate the key components related to inflation and jobs. However, the excitement quickly subsided, leaving currencies trading sideways. The news that Washington and Seoul had discussed the dollar/won market earlier this month caused the dollar to plunge sharply against the South Korean won for two straight days, causing most of the foreign exchange market’s activity. Asian currencies’ depreciation against the dollar has long been viewed as a sign that President Trump wants to see the dollar decline, adding pressure on other governments to allow their currencies to gain value in trade talks.

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