Hawkish comments from Fed officials that have been going on for two days pushed market interest rates higher, and the US Dollar strengthened with it.
But these statements do not seem to be enough for investors. Treasury bond yields have dropped again, and the US Dollar has lost ground. The correlation between the US dollar and market interest rates is positive and is working quite accurately these days.
The market continues to bet on less aggressive action from the Fed regarding interest rates. This happens even though some Fed officials insist on continuing to hike rates decisively to put an end to what is considered the main challenge of the US economy: inflation.
As Chairman Jerome Powell indicated in his statement after the last Fed meeting, everything will depend on the known economic data. Some of the most relevant metrics will be published today: the unemployment rate and Non-Farm Payrolls. The Federal Reserve expects the unemployment rate to increase and fewer jobs to be created due to a tighter monetary policy.