The dollar index strengthened to around 101.5 on Thursday, approaching its highest level since April 2025 as Treasury yields surged to multi-decade highs amid concerns that persistent, energy-driven inflation could prompt tighter monetary policy. The yields on 10-year and 30-year US Treasuries hovered near 5.3% and 5.64%, respectively, with both reaching levels last seen in 2002.
Oil prices remain elevated as negotiations between the US and Iran show little progress, despite signs of recovering crude flows from the Middle East, heightening inflation risks.
On the data front, figures released Wednesday showed the US PCE price index rose 0.3% in August, undershooting expectations for a 0.4% increase. Core PCE, which excludes food and energy, advanced 0.2%, also below the consensus forecast of 0.3%.
Following the report, market-implied odds of a Federal Reserve rate hike in October fell to about 38%, down from 51% before the PCE release. Investors now look ahead to the latest weekly jobless claims on Thursday and the September employment report on Friday for further clues on the Fed’s policy path.
