FED raised rates, more dollar strenght possible

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Yesterday, as you know, the Fed raised rates by 25 basis points as expected, but more importantly, Chair Warsh sounded very hawkish during the press conference. He said that inflation has been well above the 2% target for too long and that the Fed needs to bring it back towards that target. Some policymakers even voted for a 50-basis-point hike. So with the Fed delivering only 25 basis points this time, more hikes are still possible in the months ahead. That's why we saw such a strong move higher in US yields and the US dollar.

Looking at US Treasuries, we are now seeing some stabilization after bonds and stocks recovered during the Asian session following Trump's comments that US interest rates should be lower. However, looking at the 10-year Treasury wave count, this still looks like only a wave four recovery, with important resistance around 106.57. So more weakness in bonds could follow, which would mean another move higher in yields and could keep the dollar supported.
GH

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