The US dollar started the week with mixed sentiment and consolidated. It’s stable in the early hours on Wednesday.
Recently, sentiment in the US dollar has been dented amid political turmoil in the US. Concerns about the ability of Trump’s Administration to implement promised policies weakened the market sentiment. Last week, the sentiment improved amid the release of healthy economic data but weakness still persists. Better-than-expected jobs data along with an upward revision in US GDP facilitated a recovery in the US dollar. On May 30, the sentiment was mixed amid mixed economic data.
According to data released on Tuesday, US consumer spending and inflation data were strong, while CB Consumer Confidence fell. Consumer spending and the personal consumption expenditure price index rose 0.4% and 0.2%. Data improved the chances of an interest rate hike in the Fed’s June meeting. At 5:10 AM EST on May 31, the US Dollar Index was trading at 97.40—a gain of 0.12%.
US Treasury yields
Despite stable economic data and increased chances of an interest rate hike in June, US Treasury yields fell on Tuesday. Higher chances of an interest rate hike would increase Treasury yields. However, there wasn’t an increase on May 30 due to month-end portfolio rebalancing. Increased bond buying on Tuesday amid portfolio rebalancing weighed on Treasury yields. Treasury yields move opposite to bond prices. In the early hours on May 31, Treasury yields started to recover.
At 5:50 AM EST on May 31:
- The ten-year Treasury yield was trading at 2.222—a gain of ~0.32%.
- The 30-year Treasury yield was trading at 2.889—a gain of ~0.17%.
- The five-year Treasury yield was trading at 1.771—a gain of ~0.55%.
- The two-year Treasury yield was trading at 1.294—a gain of ~0.60%.
The iShares 20+ Year Treasury Bond ETF (TLT) rose 0.49%. The ProShares UltraPro Short 20+ Year Treasury ETF (TTT) and the ProShares UltraShort 20+ Year Treasury ETF (TBT) fell 1.5% and 1.0%, respectively, on May 30.