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S&P Global\u2019s flash PMI data showed May output improved across both services and manufacturing, with the latter climbing to 52.3\u2014a three-month high. But this rebound is inventory-heavy, driven by front-loading ahead of expected tariff disruptions. Manufacturing input inventories posted a record surge, while supplier delivery times worsened to their lowest level since late 2022.<\/p>\n
Price data painted an even sharper picture: manufacturing output prices jumped at their fastest pace since September 2022, while services hit their highest since April 2023. These inflation prints, directly tied to tariffs, are likely to reinforce the Fed\u2019s higher-for-longer posture\u2014at least in the near term. That\u2019s lending some support to U.S. yields and, by extension, the dollar.<\/p>\n
Yet that yield support has its limits. A poorly received 20-year bond auction and a ballooning deficit projection from Trump\u2019s tax bill\u2014estimated to add $3.8 trillion in debt\u2014are weighing on sentiment. Foreign investors have begun scaling back exposure. The dollar\u2019s dip to 142.80 yen earlier this week reflects this tension: rising yields aren\u2019t proving attractive enough to offset deficit concerns and political risk.<\/p>\n
While 30-year Treasury yields tested the 2023 high of 5.17% before retreating, the bigger concern is that even elevated yields are failing to draw solid foreign demand. This disconnect is key: it signals that the usual relationship\u2014where higher yields buoy the dollar\u2014is breaking down in the face of structural selling pressure. The \u201cSell America\u201d theme, fueled by weak auctions and credit downgrade risks, continues to ripple through forex markets.<\/p>\n
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[ad_1] Tariff-Driven Inflation Bumps Fed Rate Cut Hopes\u2014But at What Cost? S&P Global\u2019s flash PMI data showed May output improved across both services and manufacturing, with the latter climbing to 52.3\u2014a three-month high. But this rebound is inventory-heavy, driven by front-loading ahead of expected tariff disruptions. Manufacturing input inventories posted a record surge, while supplier delivery times worsened to their lowest level since late 2022. Price data painted an even sharper picture: manufacturing output prices jumped at their fastest pace since September 2022, while services hit their highest since April 2023. These inflation prints, directly tied to tariffs, are likely to reinforce the Fed\u2019s higher-for-longer posture\u2014at least in the near term. That\u2019s lending some support to U.S. yields and, by extension, the dollar. Foreign Demand for U.S. Assets Slips as Deficit Outlook Deteriorates Yet that yield support has its limits. A poorly received 20-year bond auction and a ballooning deficit projection from Trump\u2019s tax bill\u2014estimated to add $3.8 trillion in debt\u2014are weighing on sentiment. Foreign investors have begun scaling back exposure. The dollar\u2019s dip to 142.80 yen earlier this week reflects this tension: rising yields aren\u2019t proving attractive enough to offset deficit concerns and political risk. Bond Market Risks Undermining Dollar Support While 30-year Treasury yields tested the 2023 high of 5.17% before retreating, the bigger concern is that even elevated yields are failing to draw solid foreign demand. This disconnect is key: it signals that the usual relationship\u2014where higher yields buoy the dollar\u2014is breaking down in the face of structural selling pressure. The \u201cSell America\u201d theme, fueled by weak auctions and credit downgrade risks, continues to ripple through forex markets. Outlook: Dollar Needs a Clean Break Above 99.949\u2014Or Risk Deeper Selling [ad_2]<\/p>\n","protected":false},"author":1,"featured_media":46643,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[45],"tags":[],"class_list":["post-46642","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financas"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/posts\/46642","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/comments?post=46642"}],"version-history":[{"count":0,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/posts\/46642\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/media\/46643"}],"wp:attachment":[{"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/media?parent=46642"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/categories?post=46642"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tiproject.online\/index.php\/wp-json\/wp\/v2\/tags?post=46642"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}