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US Dollar and Treasuries Are Stable before the Fed’s Meeting

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US Dollar Index

After gaining some strength last week, the US Dollar Index was stable on June 12. The US Dollar Index is slightly weaker in the early hours on Tuesday.

The Fed’s two-day meeting will be held on June 13–14. The market expects a 0.25% increase in interest rates in this month’s meeting. The market is anticipating three interest rate hikes in 2017. Despite mixed economic data released recently, expectations of an interest rate hike are high. Weaker-than-expected non-farm payroll data for May and ISM services data didn’t lower interest rate hike expectations. The unemployment rate fell to a 16-year low of 4.3%. The market is looking forward to US consumer price index data, which could impact the pace of the interest rate hike.

At 5:30 AM EST on June 13, the US Dollar Index was trading at 97.03—a fall of 0.11%.

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US Treasury yields

US Treasury yields moved higher last week and started this week on a stable note. US Treasuries gained for four consecutive trading days and traded with strength ahead of the Fed’s interest rate decision. On Monday, a budget deficit of $88 billion was reported by the U.S. Department of the Treasury. The budget deficit was $53 billion a year ago.

At 6:00 AM EST on June 13:

  • The ten-year Treasury yield was trading at 2.22 – a gain of ~0.38%
  • The 30-year Treasury yield was trading at 2.876 – a gain of ~0.29%
  • The five-year Treasury yield was trading at 1.785 – a gain of ~0.37%
  • The two-year Treasury yield was trading at 1.359 – unchanged

The iShares 20+ Year Treasury Bond ETF (TLT) fell 0.03%. The ProShares UltraPro Short 20+ Year Treasury ETF (TTT) and the ProShares UltraShort 20+ Year Treasury ETF (TBT) rose 0.33% and 0.08%, respectively, on June 12. In the next part, we’ll discuss how commodities performed in the early hours on June 13.

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