Is the USD waking up to Fed risk again? – BNPP

Research Team at BNP Paribas, notes that the US 2y yields are around their highest levels seen since Fed Chair Yellen’s dovish speech as continued gains in equity and crude prices raises concerns that the Fed could deliver a more hawkish message.

Key Quotes

“While a further repricing of Fed expectations could extend a bit in the days ahead, USD gains are likely to trigger higher USDCNY fixings and potentially derail the oil price recovery, we suspect that feedback to the risk environment would prevent markets form pricing significant prospects for a June rate hike.”