The dollar weakened against major currencies today, in line with the decline in US government bond yields, after the release of the Personal Consumption Expenditures price index came in below expectations, easing investors' concerns about inflation and interest rate hikes by the Federal Reserve. As of 10:01 p.m. Thailand time, the dollar index was down 0.14% at 101.234, while the dollar weakened 0.16% to 1.136 against the euro and fell 0.14% to 157.05 yen. The yield on 30-year US government bonds fell to 5.578% after surging yesterday to its highest level since 2002, while the 10-year yield fell to 5.217% after surging yesterday to its highest level since 2007, and the 2-year yield fell to 4.827%. The US Commerce Department reported that the headline PCE index rose 3.4% in August year on year, below analysts' forecast of 3.7%, and rose 0.3% month on month, below the expected 0.4%. The core PCE index rose 3.0% year on year, below the expected 3.3%, and rose 0.2% month on month, below the expected 0.3%. Most recently, the FedWatch Tool from CME Group indicated that investors assigned a 62.9% probability to the Fed holding interest rates at 3.75-4.00% at its October meeting, up from only 49.1% yesterday, and a 37.1% probability to the Fed raising rates by 0.25% to 4.00-4.25%, down from as much as 50.9% yesterday.
Below-forecast PCE eases Fed hike odds, pushing the 10-year Treasury yield down to 5.217%.
Cooler PCE data lowers rate-hike expectations, pulling the 2-year yield down to 4.827%.
Softer inflation print reduces Fed tightening bets, sending the 30-year yield down to 5.578%.
