The release of a robust Nonfarm Payrolls report for September has led to a spike in US Treasury bond yields. Market participants have largely dismissed the possibility of a 50 basis point (bps) cut by the Federal Reserve (Fed), with the CME FedWatch Tool indicating that the probability of a 25 bps rate cut stands at 83.5%. The chances for a 50 bps cut have dropped to 0%, while the likelihood of the Fed holding rates steady has increased to 16.5%.
The yield on the US 10-year Treasury has risen over five and a half basis points, reaching 4.026%. This rise suggests that traders are increasingly confident the Fed will implement a 25 bps cut in each of the last two policy meetings scheduled for 2024.
US Dollar Remains Stable
Meanwhile, the US Dollar has retained slight gains, with the US Dollar Index (DXY)—which measures the dollar’s strength against a basket of six currencies—hovering around 102.52. This marks a level not seen since August 2024.
Upcoming Economic Releases
Looking ahead to next week, key economic indicators will be released, including inflation data, the Fed’s last Meeting Minutes, jobless claims, and the University of Michigan Consumer Sentiment index. These reports will likely influence market sentiment and further affect gold and dollar dynamics.
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