US jobless claims hit 200k, inflation expectations rise to 3.64%, and Fed officials signal prolonged high rates, bolstering the dollar.
Stronger-than-expected US economic data and hawkish Federal Reserve commentary pushed Treasury yields higher, supporting the Dollar Index. Weekly initial jobless claims fell to 200k, below the 205k forecast, while the 4-week moving average dropped to a two-year low of 203.25k.
Inflation expectations also surprised to the upside, with the NY Fed’s survey showing 1-year expectations at 3.64% in April, the highest since September 2023. Fed officials, including Cleveland’s Hammack, indicated rates may remain on hold for an extended period, with potential hikes if geopolitical risks persist.
The combination of robust labor data and elevated inflation expectations reinforced market expectations of a more hawkish Fed stance, reducing bets on near-term rate cuts.