U.S. Treasury yields dipped from an eight-month high as the dollar strengthened against major currencies, reflecting investor speculation on the Federal Reserve's 2025 interest rate strategy amidst a resilient U.S. economy. The benchmark 10-year Treasury yield eased to 4.689% after peaking at 4.73%, its highest since April 2024.
The pound faced its steepest three-day drop in nearly two years, pressured by economic concerns and a global bond selloff. Gilt yields surged to 16.5-year highs, further weighing on the British currency. Meanwhile, markets are anticipating a single 25-basis-point U.S. rate cut in 2025, with Friday’s payroll report poised to clarify the Fed’s trajectory.
MetLife strategist Drew Matus remarked that the dip in yields signals market concerns that recent movements may have been excessive. Minutes from the Fed's December meeting revealed apprehensions over President-elect Trump’s proposed tariffs potentially exacerbating inflation challenges.
On Thursday, U.S. bond markets closed early for the funeral of former President Jimmy Carter, while European stocks gained 0.42%, driven by healthcare and materials sectors. The STOXX 600 rebounded despite retailer losses.
The U.S. dollar index rose to 109.15, near its November 2022 high, as the euro slid to $1.0299 and sterling hit a one-year low at $1.2307. China’s yuan hovered near a 16-month low following central bank interventions.
Oil prices climbed over 1%, supported by increased winter fuel demand, with Brent crude closing at $76.92 per barrel. Gold prices also advanced, driven by safe-haven interest, reaching a four-week high of $2,669.38 an ounce.
Investors remain focused on upcoming labor data and evolving economic signals to gauge the Federal Reserve’s policy stance.


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