Dollar Rallies to 18-Month High on Persistent Global Rate Worries

The US dollar surged to an 18-month high as global rate worries persisted. The benchmark 10-year yield hit 5.34%, its highest level since 2002, before easing slightly.

Fed officials continued to highlight inflation risks, while signaling no immediate rush to raise interest rates again. This tempered expectations of a near-term hike, with markets now pricing in around a 27% chance of an October rate increase, down from nearly 70% five days ago.

In related news, the S&P 500 pared losses to close up 0.2%, while the Nasdaq gained 0.05%. The FTSE 100 fell 1.7% as the pound sterling slid to its lowest level since June due to rising gilt yields.