US Dollar On A Roll
The USD continued to gain Wednesday, continuing the pattern that we’ve seen in recent months of disappointing non-farm payrolls having little lasting effect on the dollar. A much better-than-expected result from the Empire State manufacturing survey and some acceleration in US producer prices sent US bond yields up another 2 bps and the implied interest rates on 2016 Fed Funds futures 5.5 bps. The Beige Book too had some positive things to say – eight out of the 12 Fed districts reported wage increases in the last year, up from only three districts in the previous report. Rising yields are once again supporting USD, and yet not hurting the stock market – the S&P 500 finally managed to close in positive territory for 2014 (albeit just by 0.02 point).