Dollar bides time as markets brace for Ukraine summit

SINGAPORE – The US dollar held steady against its major peers on Tuesday as global markets awaited the outcome of a White House summit with European nations that could determine the next phase of the war in Ukraine. The dollar index rose 0.31% to 98.122 with geopolitical events taking centre stage, after US President Donald Trump told President Volodymyr Zelenskiy on Monday that the United States would help guarantee Ukraine’s security in any deal to end the war with Russia.

“At the moment, markets are cautious,” said Tina Teng, an independent market analyst in Auckland, as traders weighed the possible implications for the global energy markets.

“The US dollar is going stronger against other currencies and the risk-on sentiment is still leading markets at the moment,” she added, citing stock indexes at record highs.

The euro held steady at USD 1.1667, up 0.06% so far in Asia, shuffling along the midpoint of the trading range it has sat in for the past two weeks. Markets are seeking direction this week from the Federal Reserve’s annual symposium in Jackson Hole on the likely path of interest rates. Fed Chair Jerome Powell is due to speak on the economic outlook and the central bank’s policy framework.

Many investors are away for summer holidays in the northern hemisphere, while markets will be left with few catalysts amid a thin diary of data releases on Tuesday. Cryptocurrencies bucked the trend, with bitcoin falling 0.3% to notch a third straight day of declines after hitting a record high on Thursday. Ether sank 0.6%, extending losses for a second day after failing to breach a record high last week. Against the yen, the dollar was at 147.835 yen, unchanged from late US levels and nearing the top of the trading channel it has sat in all month.

Japanese stock markets advanced in early trading on Tuesday, with both the Nikkei 225 and the Topix at record levels. The Australian dollar fetched USD 0.6495, up 0.1% in early trade, after Westpac’s consumer sentiment data for August rose to a 3-1/2-year high. The kiwi tacked on 0.1% to USD 0.59245. Sterling traded at USD 1.351, up 0.1% so far on the day, after rebounding from the low end of its range recorded over the past week.

(Reporting by Gregor Stuart Hunter; Editing by Shri Navaratnam)

Wall Street ends on muted note ahead of Jackson Hole summit, retailers’ earnings

Wall Street’s main indexes closed roughly flat on Monday, after struggling for direction while investors awaited a raft of corporate earnings reports from major retailers for more signs about the state of the economy and the Federal Reserve’s annual symposium in Jackson Hole.

Walmart, Home Depot, and Target, among others, are set to report results this week and are likely to indicate how trade uncertainty and inflation expectations have affected US consumers.

Investors are also closely watching the Fed’s Jackson Hole, Wyoming, conference between August 21 and 23, where Fed Chair Jerome Powell is expected to speak, could offer more clarity on the economic outlook and the central bank’s policy framework.

Talks at the White House on Monday between US President Donald Trump and Ukrainian President Volodymyr Zelenskiy failed to move the market significantly.

“It’s a quiet day, with investors getting ready for things to come,” said Jed Ellerbroek, portfolio manager at Argent Capital. “The most important event is Powell’s speech, as we expect updated thoughts about how the Fed is viewing this economic environment where inflation is at a fairly high level while unemployment seems to have a rising trend.”

Data on Friday showed that while retail sales were increasing broadly as anticipated, consumer sentiment overall had taken a hit from mounting inflation fears. On Monday, the National Association of Home Builders/Wells Fargo Housing Market Index fell to the lowest reading since December 2022.

Wall Street’s main indexes rallied over the past two weeks, with the blue-chip Dow .DJI hitting an intraday record high on Friday, aided by interest rate cut expectations and a better-than-expected earnings season despite an uncertain trade environment.

On the geopolitical front, Trump and Zelenskiy met to discuss the future of the war in Ukraine, days after Trump’s summit with Russian President Vladimir Putin which yielded no concrete outcome. Trump said he would call Putin and that it was possible the three leaders could hold a meeting.

The Dow Jones Industrial Average fell 34.30 points, or 0.08%, to 44,911.82, the S&P 500 lost 0.65 point, or 0.01%, to 6,449.15 and the Nasdaq Composite gained 6.80 points, or 0.03%, to 21,629.77.

Investors continue to price in a 25-basis-point cut from the Federal Reserve next month, although they have lowered their expectations for another rate cut this year, according to data compiled by LSEG.

Recent data has also suggested that while US tariffs have not filtered in to headline consumer prices yet, weakness in the jobs market could nudge the central bank to take a more dovish stance.

Intel shares fell 3.66% after a Bloomberg report said the Trump administration is in talks to take a 10% stake in the chipmaker.

Dayforce jumped 26% after a report that private equity firm Thoma Bravo was in talks to acquire the human resources management software firm.

Solar stocks including SunRun and First Solar gained 11.35% and 9.69%, respectively, after the US Treasury Department unveiled new federal tax subsidy rules for solar and wind projects, which were less strict than investors had feared.

Advancing issues outnumbered decliners by a 1.16-to-1 ratio on the NYSE. There were 185 new highs and 36 new lows on the NYSE.

The S&P 500 posted 9 new 52-week highs and 3 new lows while the Nasdaq Composite recorded 80 new highs and 69 new lows.

(Reporting by Carolina Mandl in New York and Johann M Cherian and Sanchayaita Roy in Bengaluru; Editing by Shinjini Ganguli and Matthew Lewis)

US yields tick up as traders stick with bets on September rate cut

WASHINGTON – US Treasury yields ticked up slightly on Monday as investors held onto bets that the Federal Reserve would cut interest rates next month despite data last week showing stronger-than-expected producer price inflation in July.

Yields inched higher after dipping earlier, following the National Association of Home Builders’ release of August data showing US homebuilder sentiment dropped to its lowest level since late 2022.

The yield on the benchmark US 10-year note was up 0.9 basis points from Friday’s close to 4.337%.

The two-year Treasury’s yield, which typically moves in step with interest rate expectations, inched up 1.2 bps from Friday’s close and was last at 3.771%. US two-year yields leaped last Thursday following the release of the producer inflation report, but have since fallen on renewed rate-cut expectations.

“Treasury volatility is remarkably subdued of late,” said James Camp, managing director of strategic income at St. Petersburg, Florida-based Eagle Asset Management.

“A few cuts on the short end may help housing if adjustable mortgage products follow in kind,” Camp later added on Monday’s homebuilder report.

Traders see an 84.2% chance of a 25-basis-point cut to the US central bank’s policy rate at its September 16-17 meeting, according to Fed funds futures. The Fed’s policy rate has been in the 4.25%-4.50% range since December.

The most closely-watched event this week will be the Fed’s annual Jackson Hole central banking symposium in Wyoming. Some market participants anticipate Fed Chair Jerome Powell will take a hawkish tone in his keynote speech on Friday.

Rates are likely rangebound over the next few trading sessions, said Lawrence Gillum, chief fixed income strategist at LPL Financial in Fort Mill, South Carolina.

“That said, ongoing concerns about the US fiscal situation and elevated Treasury issuance tend to be the primary catalyst for marginally higher yields absent economic data,” Gillum added.

The closely watched gap between yields on two- and 10-year Treasury notes US2US10=TWEB, considered a gauge of growth expectations, last stood at 56.8 bps versus 56 bps late Friday. It earlier reached its steepest since mid-July at 57.8 basis points.

Investors have their eyes this week on a slew of earnings releases from major US retailers – including Home Depot, Target, and Walmart – for any dents in resilient consumer spending.

“My general view of the economy is that it is slowing in a lot of places and job losses will grow ahead of year-end,” Tom di Galoma, managing director of rates and trading at Mischler Financial in Park City, Utah, said in a note.

Treasuries appeared to have a muted reaction to Monday’s meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskiy, where Trump agreed to provide security to Ukraine as part of any deal to end Russia’s war in Ukraine. The meeting followed Trump’s Friday meeting with Russian President Vladimir Putin.

The Treasury Department held two auctions on Monday. An auction for USD 82 billion in 13-week bills was 2.7 times oversubscribed with an investment rate of 4.232%. Another auction for USD 73 billion in 26-week bills was nearly three times oversubscribed with an investment rate of 4.081%.

(Reporting by Matt Tracy; Editing by Paul Simao, Rod Nickel)

Dollar in doldrums as Fed rate-cut bets build; bitcoin soars to record high

TOKYO – The dollar languished near multi-week lows against the euro and sterling on Thursday as traders ramped up bets for the Federal Reserve to resume cutting interest rates next month.

Rising expectations for Fed easing, combined with increasing institutional cryptocurrency investment, sent bitcoin powering to a fresh record peak.

The dollar index, which measures the currency against the euro, sterling, and four other major peers, was steady at 97.704 as of 0002 GMT. It dropped some 0.8% over the previous two sessions, having dipped to 97.626 on Wednesday for the first time since July 28.

The euro edged up to USD 1.1713, nearing Wednesday’s high of USD 1.1730, a level last seen on July 28.

Sterling rose to USD 1.3586 for the first time since July 24.

Against Japan’s currency, the greenback lost 0.3% to 146.95 yen.

Fed rhetoric has turned overall more dovish of late, amid signs of a cooling labour market and with President Donald Trump’s tariffs not adding to price pressures in a significant way as of yet.

Traders see a Fed rate cut on September 17 as a near certainty, according to LSEG data, and even lay around 7% odds on a super-sized half-point reduction.

“For the markets, it’s not even a matter of if the Fed cuts interest rates in September, it’s a question of how much,” said Kyle Rodda, an analyst at Capital.com.

“Signs of a downturn in the labour market have pushed futures to bake in a series of rate cuts before the end of the year.”

On Wednesday, Treasury Secretary Scott Bessent called for a “series of rate cuts,” and said the Fed could kick off the policy rate easing with a half-point cut.

Trump has repeatedly criticized Fed Chair Jerome Powell for not easing rates sooner.

A weaker dollar, the specter of political interference in US monetary policy, and the increase in investor risk appetite amid Fed easing prospects all converged to buoy bitcoin to its first record peak since July 14, pushing as high as USD 123,674.71 in the latest session.

Bitcoin was already underpinned by increased institutional money flows this year in the wake of a spate of regulatory changes spearheaded by Trump, who has billed himself the “cryptocurrency president.”

In the latest move, an executive order last week paved the way to allow crypto assets in 401(k) retirement accounts.

“Corporate treasuries like MicroStrategy and Block Inc. continue to buy bitcoin,” said IG analyst Tony Sycamore.

“Technically, a sustained break above USD 125,000 could propel bitcoin to USD 150,000.”

(Reporting by Kevin Buckland; Editing by Shri Navaratnam)

S&P 500, Nasdaq hit new closing highs on rate cut hopes

NEW YORK – The benchmark S&P 500 and Nasdaq indexes hit new closing highs for the second straight day on Wednesday on hopes that the Federal Reserve was getting close to a monetary easing cycle.

But the market reflected weakness in some technology stocks after the previous day’s strong gains.

Signs that US tariffs on imports have not fully filtered into headline consumer prices came as a relief for investors this week as they seek insight on the impact of trade uncertainty on the economy.

Some large technology stocks including Nvidia, Alphabet, and Microsoft – among the so-called Magnificent Seven stocks – were lower as investors searched for new growth drivers.

“Valuations are elevated. I do think, though, at the end of the day, the key will be the delivery of earnings, and that’s what we’re seeing,” said Katherine Bordlemay, co-head of client portfolio management, fundamental equities at Goldman Sachs Asset Management.

She said the dispersion of stock-level returns in the US is at one of the higher levels of the last 30 years.

Apple rose as Bloomberg News reported the company is plotting expansion into AI-powered robots, home security and smart displays.

According to preliminary data, the S&P 500 gained 21.01 points, or 0.33%, to end at 6,466.77 points, while the Nasdaq Composite gained 32.08 points, or 0.15%, to 21,713.99. The Dow Jones Industrial Average rose 469.10 points, or 1.06%, to 44,927.71.

The Russell 2000 index, which tracks rate-sensitive small-cap companies, added more gains to hit a six-month high.

Traders are now fully pricing in a 25 basis-point interest rate cut, according to the CME’s FedWatch Tool. The central bank last lowered borrowing costs in December.

Treasury Secretary Scott Bessent said on Wednesday he thought an aggressive half-point cut was possible, given recent weak employment numbers.

Investors were also taking notice of other sectors following the recent tech-led rally in US stocks that has pushed valuations of the S&P 500 above long-term averages.

Healthcare stocks, which have been beaten down for much of the year, led gains among the 11 S&P 500 sectors.

Chicago Federal Reserve President Austan Goolsbee said on Wednesday the US central bank is grappling with understanding whether tariffs will push up inflation just temporarily or more persistently, which would inform its decision on when to cut interest rates.

CoreWeave, which is backed by Nvidia, fell sharply after the AI data center operator reported a bigger-than-expected quarterly net loss.

Paramount Skydance jumped as the company won exclusive broadcasting rights to the Ultimate Fighting Championship for seven years.

(Reporting by Saeed Azhar in New York and Johann M Cherian and Sanchayaita Roy in Bengaluru; Editing by Maju Samuel and Matthew Lewis)

US yields fall as traders boost bets on September rate cut

US Treasury yields fell on Wednesday as traders raised bets that the Federal Reserve will resume interest-rate cuts in September and after a backup in longer-dated yields on Tuesday attracted foreign buyers.

Tuesday’s consumer price inflation report showed that President Donald Trump’s tariff policies have not yet increased price pressures as many Fed policymakers including Chair Jerome Powell have anticipated.

As a result, it is more likely that the Fed will cut rates as the labor market weakens and other data also points to a slowing economy.

“The general sense is that we were going to see more pass-through (inflation) in July. That didn’t happen,” said Vail Hartman, US rates strategist at BMO Capital Markets.

“That doesn’t mean we’re not going to see it in the coming months, but the fact that it didn’t happen in July has now galvanized those calls for a September cut, particularly given that we’ve already seen the labor market start to come under pressure in the last couple of months,” he said.

Investors will focus on whether Powell offers any new clues on policy at the US central bank’s annual economic policy symposium in Jackson Hole, Wyoming, next week.

With the market already pricing in a September cut, the question is most likely to be whether Powell pushes back against market expectations, said Hartman.

Fed funds futures traders are now pricing 25.7 basis points in cuts in September, indicating they are beginning to see the possibility that the Fed could cut rates by 50 basis points next month.

Treasury Secretary Scott Bessent said on Wednesday that there is a good chance of a 50-basis-point cut next month.

Chicago Fed President Austan Goolsbee said the US central bank is grappling with understanding whether tariffs will push up inflation just temporarily or more persistently, which would inform its decision on when to cut rates.

The interest-rate-sensitive 2-year note yield was last down 4.2 basis points on the day at 3.689%. The yield on benchmark US 10-year notes fell 5.3 basis points to 4.24%.

The yield curve between 2-year and 10-year notes flattened by around one basis point to 55 basis points.

Longer-dated Treasuries attracted buyers following a backup in yields on Tuesday that was driven by a selloff in European government bonds.

“The post-CPI dip that we saw yesterday proved to be an attractive level to add from the perspective of overseas investors,” said Hartman.

Traders are also focused on who Trump is likely to nominate as the next Fed chair when Powell’s term ends in May.

The Trump administration is considering 11 candidates to replace Powell, CNBC reported on Wednesday, citing two administration officials.

Meanwhile, Ukraine and its European allies on Wednesday signaled hope that Trump would push for a ceasefire at talks with Russia’s Vladimir Putin without selling out Ukraine’s interests or proposing to carve up its territory.

(Reporting by Karen Brettell; Editing by Andrea Ricci and Leslie Adler)

Oil gains as US-China tariff pause extension boosts trade hopes

Oil prices rose on Tuesday as the United States and China extended a pause on higher tariffs, easing concerns an escalation of their trade war would disrupt their economies and crimp fuel demand in the world’s two largest oil consumers.

Brent crude futures gained 26 cents, or 0.39%, to USD 66.89 a barrel by 0015 GMT, while US West Texas Intermediate crude futures rose 22 cents, or 0.34%, to USD 64.18.

US President Donald Trump extended a tariff truce with China by another 90 days, a White House official said on Monday, staving off triple-digit duties on Chinese goods as US retailers prepared for the critical end-of-year holiday season.

This raised hopes that an agreement could be attained between the world’s two largest economies, and could help sidestep a virtual trade embargo between them. Tariffs risk slowing down economic growth, which could sap global fuel demand and drag oil prices lower.

Investors are also looking ahead to a meeting between Trump and Russian President Vladimir Putin on August 15 in Alaska to negotiate an end to the war in Ukraine.

The meeting is set amid heightened US pressure on Russia, with the threat of harsher penalties on Russian oil buyers such as China and India if no peace deal is reached that could upset oil trade flows.

“Any peace deal between Russia and Ukraine would end the risk of disruption to Russian oil that has been hovering over the market,” ANZ senior commodity strategist Daniel Hynes wrote in a note.

Trump set a deadline of last Friday for Russia to agree to peace in Ukraine or have its oil buyers face secondary sanctions, while pressing India to reduce purchases of Russian oil.

Washington has also been pressing Beijing to stop buying Russian oil, with Trump threatening to impose secondary tariffs on China.

The risk of those sanctions being enacted has receded ahead of the August 15 Trump-Putin meeting.

Also on the radar is US inflation data later in the day, that could hint at the Federal Reserve’s interest rate path. Any sign that the central bank may cut rates soon would support crude prices.

(Reporting by Anjana Anil in Bengaluru; Editing by Christian Schmollinger)

Dollar edges up with US inflation report on tap

NEW YORK – The US dollar firmed across the board on Monday, a day before the release of a US inflation report that could help determine whether the Federal Reserve lowers borrowing costs next month.

The dollar index was up 0.3% at 98.52 after last week’s 0.4% fall. Against the yen, the US currency traded at 148.085, up 0.2%. Japanese markets were closed on Monday for the Mountain Day holiday.

The euro was down 0.3% at USD 1.16123, while sterling was down 0.2% at USD 1.34335.

“The buck is trading a little firmer against all peers, though the moves are overall modest in nature,” said Michael Brown, market analyst at online broker Pepperstone in London.

“A very modest hawkish repricing of Fed policy expectations appears to be helping the move along, likely driven by participants squaring up some positions ahead of the risk that tomorrow’s CPI print presents,” he said.

The dollar softened last week as investors adjusted their expectations for interest rate cuts from the Fed after soft data on US jobs and manufacturing.

Fed officials have sounded increasingly uneasy about the labor market, signaling their openness to a rate cut as soon as September.

Cooling inflation could cement bets for a cut next month, but if signs emerge that US President Donald Trump’s tariffs are fuelling price rises, that might keep the Fed on hold for now.

“It’s important to note ahead of tomorrow’s data that the bar for a hawkish surprise is higher,” said Francesco Pesole, FX strategist at ING.

Pesole added that a 0.3% monthly rise in core CPI would give the Fed room to lower interest rates, given the deterioration in the labor market.

Economists polled by Reuters expect core CPI to have risen 0.3% in July, pushing the annual rate higher to 3%.

Money market traders are pricing in around a 90% chance of a rate cut next month, while 58 basis points of easing are priced in by year-end, implying two quarter-point cuts and around a one-in-three chance of a third.

The dollar was little swayed by Trump signing an executive order extending a pause in sharply higher US tariffs on Chinese imports for another 90 days, a move that some market participants said was expected.

With the United States and China seeking to close a deal averting triple-digit goods tariffs, a US official told Reuters that chip makers Nvidia and AMD had agreed to allocate 15% of China sales revenues to the US government, aiming to secure export licences for semiconductors.

The Australian dollar fetched USD 0.6515, trading down 0.2% ahead of a rate decision on Tuesday, in which it is widely expected that the Reserve Bank of Australia will cut rates by 25 bps to 3.60%, after second-quarter inflation came in weaker than expected and the jobless rate hit a 3-1/2-year high.

Cryptocurrencies rose, with bitcoin up 1.1% at USD 119,679, not far from its July 14 record of USD 123,153.22, after Trump’s executive order on Thursday freed up cryptocurrency holdings in US retirement accounts.

Ether rose 1.9% to USD 4,298.23, its highest since December 2021.

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Samuel Indyk and Gregor Stuart Hunter; Editing by Mark Potter, Chizu Nomiyama, Kirsten Donovan, and Marguerita Choy)

Wall Street stocks end down, inflation data, China trade in focus

NEW YORK – Wall Street’s main indexes ended lower on Monday as investors anxiously await inflation data this week to assess the outlook for interest rates and eye US-China trade developments.

Investors expect the recent shakeup at the US Federal Reserve and signs of labor market weakness could nudge the central bank into adopting a dovish monetary policy stance later this year, fueling much of the optimism.

July’s consumer inflation report is due on Tuesday, and investors anticipate that the Fed will lower borrowing costs by about 60 basis points by December, according to data compiled by LSEG.

“The inflation data is starting to embody the more direct tariff impacts on the consumer, raising concern that inflation will remain sticky,” said Eric Teal, chief investment officer at Comerica Wealth Management.

“Lower inflationary readings and slower growth numbers are needed to support the case for lower rates.”

The Dow Jones Industrial Average closed 200.52 points, or 0.45%, lower to 43,975.09, the S&P 500 lost 16.00 points, or 0.25%, to 6,373.45 and the Nasdaq Composite lost 64.62 points, or 0.3%, to 21,385.40.

Shares of Nvidia and Advanced Micro Devices were volatile through the day, ending 0.35% and 0.28% lower, respectively.

A US official told Reuters the semiconductor majors had agreed to give the United States government 15% of revenue from sales of their advanced chips to China.

Analysts said the levy could hit the chipmakers’ margins and set a precedent for Washington to tax critical US exports, potentially extending beyond semiconductors.

Separately, US President Donald Trump signed an executive order extending a pause in sharply higher US tariffs on Chinese imports for another 90 days, a White House official said.

Enabling semiconductor sales to China was an integral issue in the agreement Washington and Beijing signed this year, which expires on Tuesday. Trump lauded China’s cooperation in talks at a White House press conference on Monday.

Traders took a step back after the S&P 500 and the Nasdaq last week logged their strongest weekly performances in more than a month.

Citigroup and UBS Global Research became the latest brokerages to raise their year-end targets for the benchmark S&P 500.

Micron Technology raised its forecast for fourth-quarter revenue and adjusted profit, boosting its shares 4%.

Intel rallied 3.5% after a report said CEO Lip-Bu Tan arrived at the White House on Monday. Trump had called for his removal last week.

TKO TKO.N surged 10% after Paramount bought the rights from the live entertainment company to exclusively distribute UFC events for the next seven years in a deal valued at around USD 7.7 billion.

Declining issues outnumbered advancers by a 1.18-to-1 ratio on the NYSE. There were 251 new highs and 98 new lows on the NYSE.

On the Nasdaq, declining issues outnumbered advancers by a 1.24-to-1 ratio.

The S&P 500 posted 15 new 52-week highs and 17 new lows while the Nasdaq Composite recorded 73 new highs and 121 new lows.

Volume on US exchanges was relatively light, with 15.5 billion shares traded, compared to an average of 18.3 billion shares over the previous 20 sessions.

(Reporting by Saeed Azhar in New York and Johann M Cherian and Sanchayaita Roy in Bengaluru; Editing by Pooja Desai and Rod Nickel)

US yields climb as investors look toward data

NEW YORK – US Treasury yields rose on Friday, with that of the benchmark 10-year note set for its first weekly gain in three weeks after a series of lackluster auctions ahead of next week’s inflation data.

Yields have been choppy throughout the week, moving lower on economic data that indicated little movement in the labor market, while a services sector report hinted at a rekindling of inflationary pressures. Yields turned higher later in the session as the Treasury saw weak demand for a total of USD 125 billion in 3-year notes, 10-year notes and 30-year bonds.

The 10-year yield recorded its biggest weekly drop in two months last week, after a soft government payrolls report sharply increased expectations on the timing and amount of rate cuts from the Federal Reserve this year.

Data next week will include multiple readings on inflation, including the consumer price index (CPI), which will heavily influence rate expectations for the central bank.

The benchmark US 10-year Treasury note yield rose 3.9 basis points to 4.283% and was up 6.5 basis points on the week, on track for its biggest weekly gain since early July.

“We probably came down as far as we’re likely to, unless we get really much weaker data, and so our call is we stall at 4.25%, said Jay Hatfield, CEO of Infrastructure Capital Management in New York.

“It’s normal for this to back up, because we don’t know what CPI is going to be,” said Hatfield, who also cited the uncertainty surrounding the makeup of the Federal Reserve board of governors.

The yield on the 30-year bond rose 4.1 basis points to 4.853% and was up 4.9 basis points on the week after two straight weekly declines.

RATE EXPECTATIONS

Expectations for a rate cut of at least 25 basis points by the Fed at its September meeting stand at 89.4%, according to CME’s FedWatch Tool, up from 80.3% a week ago. According to LSEG data, the market is pricing in 58.3 basis points of cuts by the end of the year.

St. Louis Fed President Alberto Musalem said on Friday the Fed’s inflation and jobs goals both face risks, with policymakers needing to balance which seems the more serious threat in deciding whether it is appropriate to reduce rates.

A closely watched part of the US Treasury yield curve measuring the gap between two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 52.5 basis points.

US President Donald Trump on Thursday said he will nominate Council of Economic Advisers Chairman Stephen Miran to serve out the final few months of a newly vacant seat at the Fed while the White House seeks a permanent addition to the central bank’s governing board and continues its search for a new Fed chair.

Miran is replacing Fed Governor Adriana Kugler, who announced a surprise resignation last week, effective on Friday.

In a note to clients, JPMorgan chief US economist Michael Feroli said he now expects the Fed to cut interest rates by 25 basis points at its September meeting, citing signs of weakness in the labor market and uncertainty around Miran’s nomination.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, advanced 2.2 basis points to 3.756% and was up 5.8 basis points on the week, on pace for its biggest weekly gain since the week ending July 3.

(Reporting by Chuck Mikolajczak; Editing by David Holmes and Richard Chang)

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