Dollar advances as financial conditions tighten and risk aversion sets in
Good morning. The dollar is trading near a two-month high, lifted by three forces pulling in the same direction: a blockbuster payrolls report that has triggered a hawkish reappraisal of the Federal Reserve’s likely policy trajectory, a meltdown in technology stocks, and an intensifying conflict in the Middle East that is raising inflation risks further. Treasury yields are holding at elevated levels after Friday’s payrolls print convinced investors that inflation remains a bigger risk than unemployment*. The economy added 172,000 jobs in May—more than double the consensus forecast of 85,000—and the unemployment rate ticked lower. Diffusion indices showed more industries...