US Treasury Bailout Failure Leads to US Dollar and Fed Rate Forecast Tumble

The US Treasury bailout failure has led to a significant repricing of US Federal Reserve interest rate expectations, with markets now pricing in a whopping 74 percent chance that the Fed will cut rates to 1.50 percent at their upcoming meeting. Such negative yield pressures have only added to the US dollar’s woes, with lower rate expectations hurting the attractiveness of holding the American currency. If we see further deterioration in yield forecasts, we could likewise see further declines in the US dollar.

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