After the holiday, the US dollar moderately rebounds, and the flattening of the US Treasury yield curve suggests that rate cut expectations remain.
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(1) The US market reopened after the Independence Day holiday, with the US Dollar Index edging up 0.2%. Overall, market trading sentiment remains cautious. (2) The yield on the US 10-year Treasury stands at 4.459%, rising from last Thursday's closing price of 4.447%, while the two-year Treasury yield slid from 4.130% to 4.108%. The flattening trend of the yield curve continues, indicating ongoing disagreement among market participants over the short-term interest rate trajectory. (3) US non-farm payroll data released last week came in weaker than expected, and combined with unresolved Middle East peace negotiations, demand for safe-haven assets is providing some support for the dollar. However, the upside momentum is clearly limited. (4) In terms of oil prices, news of OPEC+ agreeing to increase output has pressured the crude oil market. Weaker energy prices have also somewhat suppressed inflation expectations, limiting the potential for further gains in long-term US Treasury yields. (5) Economic data is relatively sparse this week, with the market’s attention shifting to the Federal Reserve meeting minutes to be released on Wednesday. Investors are seeking more clues regarding the policy path, and before then, the US dollar and Treasury yields are expected to remain range-bound.
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