Market Summary: Dollar Gains Amid Rising Yields

The US dollar appreciated against most currencies in the New York foreign exchange market, driven by speculation that the Federal Reserve may not cut interest rates significantly at its meeting on the 17th-18th.

According to the Ministry of Commerce, August retail sales (seasonally adjusted) increased by 0.1% from the previous month, contrary to economists’ forecasts (a decrease of 0.2%). This suggests that the US economy may have remained strong through most of the third quarter.

Forex Market

The dollar’s appreciation was driven by the unexpected increase in US retail sales in August, which led to speculation that the Federal Reserve will not cut interest rates significantly at its meeting on the 17th-18th.

Marvin Lo, senior global market strategist at State Street in Boston, stated, “Retail sales were decent and did not indicate an immediate need for deep rate cuts.”

Bond Market

In the US financial and bond markets, yields on government bonds rose. However, the benchmark 10-year bond yield at one point hit a 16-month low.

The yield on 10-year government bonds temporarily hit 3.599%, the lowest level since May 2023. After that, it rose and reached 3.642% in the final stage.

Stock Market

The US stock market closed almost unchanged. Ahead of the US Federal Open Market Committee’s (FOMC) policy decision on the 18th, the S&P 500 index, which reached its highest price during trading hours, narrowed its gains.

Microsoft (MSFT.O) rose 0.88%, pushing the S&P 500 higher. The company’s board of directors approved a $60 billion share buyback and raised its quarterly dividend by 10%, which was a positive response.

Precious Metals

Gold bullion futures on the New York Mercantile Exchange (COMEX) continued to fall as selling was mainly due to position adjustments ahead of the US Federal Reserve’s monetary policy decision the following day.

Energy Market

Crude oil futures on the New York Mercantile Exchange (NYMEX) continued to rise on the back of ongoing supply concerns due to the impact of the hurricanes and expectations for interest rate cuts from the US Federal Reserve (Fed).

According to a report released on the 16th by the US Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE), approximately 12% of crude oil production and 16% of natural gas production are still being recovered in the US Gulf Coast, where Hurricane Francine did not hit last week.