US Dollar: Consumer clouds over hike pricing – Rabobank

Rabobank’s Molly Schwartz notes that United States (US) Treasury yields were mostly flat with a slight bull-steepening bias, while the US Dollar Index (DXY) was little changed. She highlights that the US OIS curve still prices a high probability of further rate hikes. However, Schwartz stresses that the US consumer outlook and confidence remain weak, with inflation data due Thursday closely watched.

Hikes priced as confidence deteriorates

"United States (US) Treasury yields traded mostly flat from the open, across the yield curve, with a slight bull-steepening bias, and the DXY index was little changed at 99.19."

"The US OIS curve remains positioned firmly in favor of hikes, pricing in around 70% of a hike by year-end, and a full hike by March of next year."

"But the US consumer outlook remains grim. US Conference Board consumer confidence picked up a touch from 92.8 to 93.1, but remains firmly planted in negative territory."

"While we should note that consumer confidence has been a poor indicator of economic performance for quite some time now, a poor consumer outlook coupled with a dire inflationary outlook could spell trouble for those at the lower end of the income spectrum. "

"We will see headline and core PCE price data for April on Thursday, expected to register 3.8% y/y and 3.3% y/y, respectively."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)