DOLLAR STRENGTHENS AS HAWKISH FED SIGNALS FUEL RATE HIKE EXPECTATIONS
- Dollar Index: The US Dollar Index (DXY) climbed to 102.30 in Asian trading, approaching a two-week high after rising 0.5% in the previous session.
- Hotter Inflation: US consumer prices increased more than expected in October, driven by higher food and accommodation costs, strengthening expectations of further monetary tightening.
- Fed Rate Expectations: Hawkish comments from Federal Reserve officials have significantly shifted market expectations. Traders are now pricing in an 85% probability of a 25-basis-point rate hike at the December 9 meeting.
- Bigger Hike Risk: Markets are also assigning a 15% probability to a more aggressive 50-basis-point increase, while expectations of a January rate hike are gaining traction.
- Treasury Yields: The US 10-year Treasury yield surged 13.8 basis points to 4.996%, reflecting growing concerns over persistent inflation and a more restrictive Fed policy outlook.
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GLOBAL MARKETS
Fed: US core inflation rose 0.3% month-on-month in October, above expectations. Hawkish Fed comments have raised the possibility of a 50-basis-point hike in December.
Equities: US stocks fell following the inflation report. The S&P 500 declined 0.4%, while the Nasdaq lost 0.7%. Asian markets were mixed.
Oil: Brent trades around $92 as hopes of easing US-Iran tensions and recovering supply weigh on prices.
Gold: Gold fell 2.6% to $4,032 amid a stronger dollar and rising Treasury yields.



