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Deutsche Bank’s Early Morning Reid team notes that Kevin Warsh’s hawkish debut as Fed Chair and a more aggressive dot plot pushed markets to fully price a Fed hike by October. The bank highlights that chances of a September move rose sharply, 2-year Treasury yields hit a 15‑month high, and the Dollar Index advanced as G10 currencies weakened.
Fed repricing lifts Dollar and yields
"That shifting Fed rhetoric led to a dramatic fed funds repricing, with chances of a September hike rising from 36% to 80% by yesterday’s close and 38bps of hikes being priced in by year-end."
"In turn, 2yr Treasury yields (+13.1bps) saw their largest increase in over a year to a 15-month high of 4.19%. However, the 10yr yield was up by a more moderate +4.9bps while 30yr yields actually ended the day -1.2bps lower."
"The rates repricing also weighed on assets such as gold (-1.71%) and Bitcoin (-2.15%). On the other hand, the dollar (+0.55%) gained against all G10 currencies."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)












