The U.S. dollar is building on its recent momentum as oil prices ease, but rising interest rate expectations are keeping investors focused on risks across global markets. The 30 year Treasury yield recently reached its highest level in 24 years, adding to concerns about the impact of higher borrowing costs.
Currency markets are also seeing notable moves. The Canadian dollar is weakening as economic conditions soften, while the gap between U.S. and Canadian yields has widened. Meanwhile, the euro is trading near a three month low amid concerns surrounding France’s fiscal and political outlook.
Implied volatility has increased across asset classes, although it remains relatively low compared with historical levels. Strong consumer spending, government deficits and continued AI investment are providing support for markets, but the U.S. 10 year Treasury yield has risen significantly since Jackson Hole, highlighting the potential risks associated with higher borrowing costs.