Dollar Soars on Bond Rout and Hawkish Fed Expectations

The U.S. dollar reached a two-month high on Monday, driven by a historic bond rout and increased expectations of Federal Reserve rate hikes.

A steep rise in borrowing costs and a sharp hawkish repricing of Fed interest rate expectations have buoyed the dollar over the last two weeks, with those trends continuing on Monday.

The benchmark 10-year Treasury yield rose 5 basis points to 5.237%, its highest level since June 2007, while the 30-year bond yield climbed 5.1 basis points to 5.553%, a new high since June 2004.

Investors are awaiting key economic data this week, including the personal consumption expenditures (PCE) price index on Wednesday and the September nonfarm payrolls report on Friday, which could further shape the outlook for monetary policy.