Newsletter · 2026-09-25 · Ashutosh Agarwal

Bonds Break Loose and the Rescue Talk Begins - The Dollar Brief - Week of September 25, 2026

The Dollar Brief for the week of September 25, 2026 (podcasts recorded roughly September 18 to 25): the 10-year Treasury tore past 5% to about 5.15% and the 30-year hit 5.47%, a light bond buyback and hawkish Fed speakers pushed the debate from what 5% means to when the authorities step in, and desks weighed what an intervention would do to a firm but capped dollar.

The Dollar Brief

Week of September 25, 2026: Bonds Break Loose and the Rescue Talk Begins

Yesterday this brief called 5% "the floor now." It took the bond market about 24 hours to prove that too cautious.

On the Financial Times' Unhedged podcast, recorded Thursday, host Katie Martin put it bluntly:

"Buckle up, folks, because the wheels are coming off in the government bond markets and it is not pretty."

The 10-year Treasury yield "tickled 5.15%." Earlier in the week US government bonds had their biggest fall "since Donald Trump's Liberation Day last year." The 30-year hit 5.47%, the highest since 2004, according to NAB Morning Call.

The debate has moved on again. Last week the question was whether buybacks could calm things down. Earlier this week it was what a steady 5% means. Now people are asking a sharper question: at what point do the authorities step in, and what would that do to the dollar?

(A quick glossary. A "yield" is the interest rate on a bond, and it rises when the bond's price falls. The "10-year" and "30-year" are long-term US government loans, and they drive mortgage and business borrowing costs. A "basis point" is one-hundredth of a percentage point, so 15 basis points is 0.15%. The "yield curve" compares short-term and long-term rates. It "flattens" when the gap narrows and "steepens" when it widens. An "auction" is how the Treasury sells new debt. A "buyback" is the Treasury buying back its own older bonds. The "DXY" measures the dollar against a basket of rich-country currencies. The "carry trade" means borrowing in a cheap currency, like the yen, to buy higher-yielding assets elsewhere. A "stablecoin" is a digital dollar token backed by cash and Treasury bills.)

TL;DR

The Treasury sell-off picked up speed. The 10-year touched about 5.14–5.15% and moved 14–17 basis points in a single day. Rob Armstrong said that in stock market terms, "that would be like a day where markets moved like 7%" (Unhedged, Sep 24).
Four sparks at once: hot business surveys, hawkish Fed officials, oil, and a weak 5-year auction. Saxo's John Hardy said one person he respects was "essentially calling it a failed auction," the worst bidding since late 2018 (Saxo Market Call, Sep 24).
The buyback came in light. The Treasury "only bought $4 billion worth of bonds where they had $6 billion targeted." NAB asked the obvious question: "if this isn't the week you do the full $6 billion, then what is?" (NAB Morning Call, Sep 25).
The rescue talk has started, and it matters for the dollar. Hardy: "intervention risk is ratcheting higher by the hour." He warned that a surprise policy move could send "the dollar suddenly going weaker after heading stronger, stronger, stronger" (Saxo Market Call, Sep 24).
The Fed isn't coming to the rescue. New York Fed president John Williams said another hike by year-end would be "reasonable" and that "the time for explicit forward guidance is over." Prediction-market traders put a 67% chance on an October hike (Squawk Pod, Sep 24).
Is 5% even that high? Armstrong: with nominal growth "at six-something percent," a 5% yield "makes perfect sense." Michael Pento looks at the same gap and concludes that the growth won't last (The Julia La Roche Show, Sep 24).
Positioning check: bets against the yen are no longer crowded. State Street's Tim Graf says hedge funds have flipped to "slightly long" the yen. The net of all currency futures shows "a small dollar short" (Street Signals, Sep 24).
The stablecoin rescue plan got its sharpest critique yet. Moving Treasury borrowing into stablecoin-held T-bills turns patient long-term lenders into "short duration, runnable funding" (The Bitcoin Standard Podcast, Sep 22).

What's new

The bond rout: what actually happened

For weeks the 10-year held around 5%. Hardy said that level was "anchored," and that gave stocks room to keep rising. This week it broke above.

The FT team on Unhedged listed the sparks:

A red-hot business survey. Ian Smith said the US PMI (a monthly survey of purchasing managers) showed "business output growth in the U.S. rising at its fastest in five years." Hardy gave the numbers: manufacturing 57 vs 53.7 expected, services 58.7 vs 55.8 expected. His read: "so far these big price rises for energy don't seem to be slowing down the economy" (Saxo Market Call, Sep 24).
A Fed official "opened their mouth." Armstrong joked about it and then explained that one governor said "this might take quite a few interest rate increases to get under control."
Oil went back up after hopes for peace talks at the UN General Assembly faded.
The 5-year auction went badly. Smith said it "fed into those supply concerns" (Unhedged, Sep 24).

The size of the move is the story. Armstrong: "I got on a plane yesterday morning and yields were one place and I got off the plane and they were in a completely different place." Smith: "If your own household interest rate moved that much in a day, you would be quite scared."

Smith also suggested why it happened so fast. Some of it probably wasn't new views. It was traders who had bet the wrong way and were forced to sell, as in the UK gilt sell-off earlier in the war. People "suspected that maybe it's hedge funds getting stopped out of positions… It feels like we're seeing some of those effects come through that are magnifying the rises in yields."

On NAB's Friday morning podcast, Phil Dobbie and Taylor Nugent covered the next leg. The 10-year was up "another four basis points to 5.15%." The 30-year reached 5.47%. Brent crude was "back over 106," and "the US dollar is a bit higher again up 0.2% on the DXY" (NAB Morning Call, Sep 25). (NAB, Saxo and State Street are bank strategists who trade and advise clients for a living. The FT hosts are journalists.)

The buyback came in light, and the market noticed

Earlier this month the Treasury doubled its buyback program, aimed at long-dated bonds. The idea was to show there is a buyer when the market wobbles. This week's operation targeted up to $6 billion, covering Treasuries maturing between 2046 and 2056. A Bitcoin-focused daily podcast called it "the first operation under Bessent's expanded program" (Bitcoin News Alerts, Sep 24). (Crypto venue. It also claimed foreign demand for Treasuries fell 80% year on year to $49 billion. That figure is theirs and hasn't been checked.)

The Treasury bought only $4 billion. Nugent said markets have been "rightly skeptical about how much firepower there really is in that kind of enhanced buyback program to… durably shift longer-term yields." There was "a bit of disappointment that they didn't do the full $6 billion" in exactly the week when that was the point (NAB Morning Call, Sep 25).

Smith went further on Unhedged. "The Treasury buyback operation has fizzled a little bit." Together with the White House's talk of banning diesel exports, "it does speak to a little bit of desperation on the part of the U.S. administration. We've lost control of some of the causes of inflation. So let's just try and deal with some of the effects."

One more option came up. On the Rob Black Show (Sep 24), Rob Black passed along a CNBC report by Steve Liesman that the Treasury "could tap its massive general account" to help pay for its bond buying. That account is the government's cash balance at the Fed. Black: "Uncle Sam may be reaching into the couch cushions. Except for the couch cushions contain a trillion dollars." (A report passed along by a host, not a Treasury statement.)

Dennis DeBusschere of 22V Research knows Treasury Secretary Scott Bessent, who has spoken at 22V conferences. He is skeptical that any of this can hold yields down for long: "the size of the U.S. Treasury market… dwarfs any program that he is willing to use." With nominal GDP (growth plus inflation) at 6.5%, "there's not a world where either the Fed or the U.S. Treasury is going to be able to keep U.S. Treasury yields too low without there being some market reaction" (On The Tape with Danny Moses, Sep 23).

"When's the intervention?" The new question, and why the dollar cares

Saxo's John Hardy titled Thursday's podcast "This is nuts, when's the intervention?" He opened with: "we have a bond market that is in meltdown mode."

He thinks the rescue won't look like the old playbook. "Be surprised if it's just a straight up QE," he said, meaning the Fed buying bonds with newly created money, "because that aggravates the risk of sending too accommodative a signal" when the economy is running hot. He listed the tools he'd expect instead:

"Forcing pension funds into bonds."
Changing bank rules. Specifically, "changing the rules around how they… are assessed penalties for leverage ratios based on their treasury holdings." In plain English: making it cheaper for banks to hold Treasuries.
"Some kind of tax status changes to people holding fixed income."
"Maybe at the margin trying to signal a little bit of austerity," meaning spending restraint, "but you can't signal too much of that."

Hardy calls this "not dovish" but "just keeping things under control." He sees the risk for currency markets directly. A surprise policy headline could catch traders "sitting there in a foreign exchange trade" with "the dollar suddenly going weaker after heading stronger, stronger, stronger linked to this rise in yields." His bottom line: "If it doesn't stop, intervention risk is ratcheting higher by the hour." He also noted that Bessent "was trying to manage and massage the message on the treasury market ahead of this bit of a wipeout. And he's wearing a decent amount of egg on his face" (Saxo Market Call, Sep 24).

GMO's Henry Peabody made a related point from a longer-term view. Over time, he said, the government's finances "will require that we keep rates below nominal growth." If inflation falls, he warned, the question becomes whether "we see some sort of financial repression, some sort of yield curve control." Financial repression means policies that push savers into government debt at low rates. Yield curve control means the central bank capping long-term rates (Monetary Matters, Sep 24).

The Fed is still leaning the other way

If anyone hoped the Fed would soften, Thursday's speeches ended that. On CNBC's Squawk Pod (Sep 24):

John Williams (New York Fed president, a policymaker): it "would be reasonable to expect another interest rate hike by the end of the year." He also said "the time for explicit forward guidance is over," matching Chair Kevin Warsh's refusal to signal moves in advance.
Michael Barr (Fed governor, a policymaker): the Fed "may need to raise interest rates further."
Prediction market: traders on Kalshi were "betting 67 percent chance the central bank hikes by a quarter point in October."

NAB's Nugent counted four hawkish Fed speakers in one day: Paulson, Hammack, Williams and Barkin. All were "hawkish, but not more hawkish than what markets had been anticipating." That explains why short-term yields held steady while the long end sold off (NAB Morning Call, Sep 25).

Peabody's case for why the Fed may have to go higher than it has signaled was the most thought-provoking argument of the week. His point is that rate hikes hit different borrowers very unevenly. More lending now happens outside banks, through private credit funds and fixed-rate bonds, and that has "loosened the connection between policy and the actual economy." Big companies and AI borrowers "that termed out" (locked in long-term debt) are hardly affected. Meanwhile "mortgages are 6%… car loans are running north of 7% on used cars," and the riskiest borrowers pay "well north of 10 percent, probably north of 12." The result is that financial conditions stay loose where it matters most for inflation. On currencies, he added: "The dollar is at a sort of near-term local low, although it's rich on a real effective exchange rate basis" (expensive once you adjust for inflation against trading partners). His conclusion: "the upward pressure on rates is very real" (Monetary Matters, Sep 24).

Is 5% actually expensive? The same fact, read two ways

The best argument of the week came from two people who agree on the fact and disagree on what it means.

Armstrong (the calm view): "Roughly speaking, the 10-year bond yield travels with nominal U.S. GDP growth… Nominal U.S. GDP growth is at six-something percent. Bond yields are at five. This is actually a yield level that makes perfect sense." What worries him is the speed, not the level: "It is economically orderly in some sense." He also thinks the US is better placed than others: it "can grow and inflate its way out of at least part of this problem" (Unhedged, Sep 24).

Pento (the worried view): He starts from the same point. Treasuries "tend to trade with nominal GDP, which right now is around 6%. So we're actually way below where treasuries should yield." He concludes the opposite: "that's telling me that nominal increase in GDP will not last." He adds a solvency angle: US debt is "now 720% of our revenue," with "$2 trillion annual deficits as far as the eye can see." In his view, rising long-term rates will be "the pin that pops everything" in 2027 (The Julia La Roche Show, Sep 24). (Pento runs money and has been calling for a bust for a long time. Weigh him accordingly.)

DeBusschere (the contrarian bull on bonds): He agrees the economy is strong: "6.5% nominal GDP, which is not slowing in 3Q," with unemployment at 4.1%, below the Fed's own 4.3% forecast. But he thinks the next few months of data will be weak, because surveys suggest "we're going to have dovish data galore for the next three months." His forecast: "10 year yields back at 4% by Christmas Eve." He also made a point he says is under-discussed: Fed hikes can actually lower the term premium, the extra yield investors demand for tying up money for years. "Despite what the president is saying, higher rates actually lowers 10-year term premium" (On The Tape with Danny Moses, Sep 23).

The curve is whipsawing, and Wednesday's story is already out of date

Wednesday's hot topic, covered here yesterday, was the flattening curve, which is a growth-scare signal. Hardy confirmed it: the gap between 2-year and 10-year yields is "still 20 basis points from" inverting, "some half of what it was a year ago." Bank stocks are "not doing very well," and he calls that "largely a function of that yield curve flattening." The 2-year itself got "close to 5%" (Saxo Market Call, Sep 24).

Then overnight it reversed. Nugent: "there was certainly a steepening theme overnight with kind of the move very much led by 30 years… Whereas, you know, two-year yields reasonably steady." Dobbie linked that partly to the weak buyback (NAB Morning Call, Sep 25).

The plain-English takeaway: when short rates lead, the market is thinking about the Fed. When the 30-year leads, it's thinking about debt and who will buy it. Both happened within 48 hours.

The dollar: firm, but the rest of the world is repricing too

The dollar is edging higher (NAB: +0.2% on the DXY Thursday), but nobody is calling a breakout.

Bank of America (Sep 18): Asked whether a hawkish Fed can push the dollar to new highs, BofA FX strategist Adarsh Sinha said it "will prove a bit more challenging only because, yes, the Fed is hawkish, but so are the central banks." Also, US growth "stands out less than [it] did, say, over the summer… I don't see enough here yet to suggest that we're going to break to new highs in the dollar versus, say, the euro or the DXY basket" (Global Research Unlocked, Sep 18).
Hardy agrees on the "everyone is hawkish" point. Norway's central bank hiked to 4.5% on Thursday, Sweden's signaled a hike this year, and "euro yields lifting to new cycle highs" (Saxo Market Call, Sep 24).
MUFG (Sep 18): Derek Halpenny sees short-term risk that the dollar "could extend further." But the Fed's projections show one more hike while "there's three priced into the market. So I do think we're overdone" (The MUFG Global Markets Podcast, Sep 18).

The FT team explained why Europe is in a worse spot. Because the US bond market "is so much bigger than every other government bond market on Earth… it's pulling borrowing costs higher for everybody else. So thanks for that, USA," Martin said. The US can grow out of it. "The U.K. and France… can't just grow and inflate our way out of this problem." Armstrong: "for a stock market that's dealing with weak domestic growth, high yields are really poison" (Unhedged, Sep 24). Hardy flagged the French-German 10-year spread at 112 basis points and called it "a boiled frog situation." That combination of higher rates everywhere with the pain landing hardest in Europe is the quiet argument for a firmer dollar against the euro.

The yen and the carry trade: less crowded than you'd think

State Street's Tim Graf devoted his podcast to a risk he thinks is under-watched: carry trades funded in yen, buying higher-yielding emerging-market currencies. He described the setup plainly. Over the past year, an emerging-market carry index "earned again 10%, but the volatility… has been very low. It's more like 4%, 4.5%," with a maximum drawdown of about 4%. That is exactly the kind of calm that makes leverage look safe. He cited Hyman Minsky: "stability begets instability."

Then he checked who is actually positioned, and the news was better than expected:

Hedge funds are no longer short the yen. Speculators "were quite short yen a few weeks ago," but after the sharp yen rally "these investors are actually slightly long."
The dollar itself is a small short. "The net of all currency futures positions reported to the CFTC also shows that there's a small dollar short," and institutions hold "a modest dollar underweight."
The crowded spot is on the buying side. "The Mex position in particular is pretty large relative to history" (speculators long the Mexican peso).
His verdict: "there's a little bit of position risk, but none of it is particularly extreme" (Street Signals, Sep 24).

On the yen itself, Halpenny noted dollar-yen fell "from 160 to 154" in the first days of September on hawkish Bank of Japan talk, then only "just above halfway" recovered. He expects the BoJ to hike in December and again in Q2 2027, "to take us to 1.75%" (The MUFG Global Markets Podcast, Sep 18).

Pento added the Treasury angle. With Japanese yields now "3% plus" instead of zero, the gap that powered the carry trade "is narrowing… it's not worth it anymore." That is one more reason he gives for upward pressure on US yields (The Julia La Roche Show, Sep 24).

And on The Rest Is Money (Sep 20), a guest looked back at Bessent's July yen intervention. He traded "euro yen without notifying the European Central Bank," spent roughly $5 billion, and was photographed holding a note reading something like "buy… 5 billion JPY." The guest thinks the photo was probably staged to "muscle the market around," but said the firepower wasn't there: "dollar yen trades about a trillion dollars a day… it's a drop in the bucket." The bigger cost, he argued, is trust. The Treasury's "convenience yield," the discount the US gets because everyone wants its debt, "has been eroding," and "treasuries [are now] priced at the price you'd expect them to be priced at with no really sort of added bonus."

Stablecoins as the new Treasury buyer: the best critique so far

Yesterday's brief laid out the bull case for Bessent's stablecoin plan: stablecoins must hold T-bills, so every new stablecoin dollar becomes a buyer of government debt. This week Saifedean Ammous gave the sharpest case against it on The Bitcoin Standard Podcast (Sep 22). (He is a prominent Bitcoin advocate. His criticism of the dollar system isn't neutral, but he backs it with published research.)

Bessent has said so directly. "Treasury will adjust its issuance if structural demand changes," pointing "to stablecoins and money market mutual funds as growing bill buyers."
The flip-flop. Ammous notes Fed governor Stephen Miran wrote a 2024 paper accusing then-Treasury Secretary Yellen of "manipulating the yield curve by overissuing bills," and "Scott Bessent also campaigned on that critique."
Rollover risk. Short-term bills track the Fed. "If there is an inflation problem… all of that short term issuance becomes really dangerous because the interest rates on that short term issuance can rise very quickly." That's awkward timing, with the Fed hiking and short yields near 5%.
Run risk. "Easy come, easy go." Stablecoins "transform some of the world's dollar demand into an instrument redeemable on demand," turning "long duration, relatively inert capital into short duration, runnable funding." He cites the Bank for International Settlements (the central bankers' bank): stablecoins' effect on Treasury yields "can be up to three times larger during redemption episodes than during issuance episodes."
How big is the benefit? He pulls the research together. Economists Azzimonti and Quadrini estimate that widespread stablecoin adoption could lower US rates by 20–40 basis points. A BIS study (Ahmed and Aldasoro) finds a $3.5 billion stablecoin inflow cuts the 3-month T-bill yield by about 5 basis points at peak, with "no meaningful spillover to long-term yields." For scale, the Congressional Budget Office estimates every 10 basis points off Treasury rates cuts cumulative deficits by about $379 billion through 2036.

The key point for this week: the stablecoin buyer helps the short end, and the short end isn't the problem. The 30-year is.

The big picture: the Treasury needs a lot of money

Darius Dale of 42 Macro put numbers on the pressure behind all of this on The Pomp Podcast (Sep 24). Counting refinancing plus new borrowing, the Treasury needs "over $12 trillion" over the next year, "up from about less than 5 trillion prior to COVID." That is "40% of global savings… That used to be on average, 20%." Ownership has changed too: "foreigners owning 30% of the market, the private non-bank sector owning 60% of the market now. Up from 36%" in 2021. Price-sensitive buyers "will be met with incremental requests for higher ex-ante yields" (they will want higher rates up front). His headline line: "Treasury bonds are no longer considered to be a safe haven asset." (Dale is openly bullish on risk assets and admires Bessent. He called him "probably the best… treasury secretary" in the modern era. The podcast's host floated a theory that Bessent encouraged Stan Druckenmiller's recent op-ed. That is speculation, not reporting.)

Geopolitics, diesel and the midterms

"You have to be an oil trader." Rabobank's Michael Every on Macro Voices (Sep 24): "if you're an interest rate trader or an FX trader at the moment, you have to be an oil trader. You've got to look at that to understand what bond yields are going to do." He doesn't buy the White House line that Iran will make a peace deal right after the US election. "Our base case [is] that you will see escalation once the election's out of the way." He also warned that after strikes on Russian refineries, "a genuine, really serious diesel crisis is possible."
A diesel export ban heading into the midterms. The FT team thinks banning US diesel exports would bring short-term relief and then do real damage. Martin: "it does feel a little bit like wetting your pants at the North Pole… Very briefly, you're all kind of warm and relieved and then you freeze to death." Armstrong: "Inflation is not a phenomenon that stops at borders" (Unhedged, Sep 24).
One de-escalation: US–China. Bessent (a policymaker, speaking on Fox and replayed on Squawk Pod) said the two sides "will extend what we call the Busan agreement… scheduled to end on November 10th… until January 10th." China reportedly wanted two years. That puts a big trade fight on hold until after the midterms (Squawk Pod, Sep 24). Hardy called it "managed brinkmanship."

The debate

Is the bond sell-off healthy or dangerous?

Healthy/orderly: Armstrong says 5% is fair with nominal growth above 6%. The US "can grow and inflate its way out." DeBusschere adds that the Fed's hikes should eventually lower the term premium.
Dangerous: Hardy calls it "meltdown mode" and "hit the wall stuff." Pento sees it as the trigger for a 2027 bust. Dale says Treasuries have lost their safe-haven status.
What settles it: whether the moves stay orderly or the forced selling continues. Watch the next auctions, starting with Thursday's 7-year.

Will the authorities step in, and what would that do to the dollar?

Yes, soon: Hardy says intervention risk is rising "by the hour." He expects bank-rule and pension changes, not QE, and warns the dollar could "suddenly" weaken on the headline.
They can't do much: DeBusschere says the market "dwarfs any program." NAB and the FT note the buyback came in light. The Rest Is Money says the yen intervention was "a drop in the bucket."
What settles it: any change to bank capital rules, the next buyback size, and whether the Treasury tilts issuance further toward bills.

Does the Fed hike again in October?

Yes: Williams, Barr and Kalshi's 67%. Peabody thinks the Fed may need to go "higher than we expected for probably longer."
Overdone: MUFG says three hikes are priced against one in the Fed's projections. DeBusschere expects "dovish data galore."
What settles it: the inflation data before the late-October meeting.

Is the dollar headed higher?

Firmer: a hawkish Fed, a DXY edging up, and European bond markets under more strain than America's.
Capped: BofA says every central bank is hawkish now, so there's no breakout. Peabody says the dollar is already "rich" on a real basis. Hardy's intervention risk points to a sudden drop.

The trades in play

These are speakers' own stated views, not advice.

Long 10-year Treasuries: "4% by Christmas Eve." Dennis DeBusschere, 22V Research, expects weak data to pull yields down from above 5% (On The Tape with Danny Moses, Sep 23). (Research firm. He also noted the launch of his own advisory business on the same show.)
Short euro-yen. MUFG's FX team has been "running a trade view short euro yen," though Halpenny sees near-term risk of a rebound first and says dollar-yen could get "back up to the 160 level" (The MUFG Global Markets Podcast, Sep 18). (Bank strategy.)
Beware two-way risk in dollar trades. Hardy's warning to anyone with FX, curve or futures positions: a sudden policy headline could flip the dollar from "stronger, stronger, stronger" to weaker (Saxo Market Call, Sep 24). (Broker strategist.)
Yen-funded EM carry: still works, and less crowded than feared. State Street's Graf sees "a little bit of position risk" but nothing extreme. The peso long is the most crowded leg (Street Signals, Sep 24). (Bank strategy.)

Read-throughs

The weak buyback matters more than the yield level. A backstop only works if the market believes there's firepower behind it. Buying $4 billion out of a $6 billion target in the worst week of the year sends the opposite message.
Intervention is now priced as a possibility, and that is a hidden two-way risk for the dollar. The dollar has been rising with yields. A policy move that caps yields could reverse that fast. Anyone long the dollar because of high yields is also, in effect, betting on no rescue.
Stablecoins fix the wrong end of the curve. Every piece of research quoted this week shows stablecoin demand lowering short-term bill yields, with no effect on long-term yields. The pressure is at the 30-year.
Europe gets hit harder than the US, and that supports a firmer dollar against the euro. Higher US yields raise borrowing costs everywhere, but slow-growth, high-debt Europe (France especially) is least able to absorb them.
The October Fed meeting and the November 3 midterms are close together. Williams says hike, Kalshi says 67%, and Rabobank's Every expects geopolitical escalation after the vote. Rate risk and political risk are now bunched into the same five weeks.

What changed this week

5% stopped being a floor and became a launchpad. The 10-year touched about 5.15% and the 30-year 5.47%, the highest since 2004.
The buyback lost credibility. It came in at $4 billion against a $6 billion target, described as having "fizzled a little bit."
"Intervention" entered the conversation. Market strategists are openly asking what the authorities will do and how it would hit the dollar.
The Fed sounded more hawkish. Williams endorsed another hike by year-end and dropped forward guidance, with October hike odds cited at 67%.
Positioning looked cleaner than feared. Per State Street, hedge funds are no longer short the yen and futures show only a small dollar short.
US–China tension was pushed out. The trade truce now runs to January 10, after the midterms.