US Dollar: Fed pressure and bond sell-off – ING
INGs Chris Turner highlights that rising US Treasury yields and a bearish yield curve steepening are pressuring the Federal Reserve (Fed) to sound more hawkish, even without immediate hikes. He notes high Oil prices and higher yields are negative for risk assets but supportive for the Dollar. Turner flags US Dollar Index (DXY) resistance at 99.50 and support near 99.00 in the near term. Fed rhetoric and yields support Dollar “While UK politics may be blamed for a small part of the global bond market sell-off, the bigger story is 10-year US Treasury yields rising to their highest levels since early 2025. This followed a raft of higher-than-expected US inflation data last week, where final demand PPI rose at 6% year-on-year in April – levels we have not seen since early 2023. ” “This kind of inflation is pressure-testing the Federal Reserve and swinging behind the three dissenters at the April FOMC meeting, against the implicit easing bias in the FOMC statement.” “Looking at the bearish steepening in the bond market today, the narrative is one of the Fed potentially ‘falling behind the curve’ and the need to at least sound hawkish, even if it does not necessarily hike.” “Wednesday‘s release of the FOMC minutes