Profit-taking sent the USD and US bond yields lower before the long Thanksgiving holiday starting today.US stock and bond markets will be closed on Thursday and Friday before returning on Monday, DBS’ Senior FX Strategist Philip Wee notes.

Too early to underestimate Trump’s tariff threats

“The DXY Index fell a second time in three days by 0.9% to 106, its lowest close since November 11. US inflation data met expectations; October’s PCE headline and core inflation were unchanged at 0.2% MoM and 0.3%, respectively, the same level as a month ago.”

The futures market increased the probability (66.5% vs. 52.3% a week ago) of the Fed lowering rates by 25 bps to 4.00-4.25% at its FOMC meeting on December 18.The US Treasury 2Y yield fell a third session by 2.9 bps to 4.23%, its lowest close since November 7.”

“The 10Y yield ended November at 4.26%, near the month’s low of 4.22% seen on November 1. US fiscal sustainability worries ebbed after Trump nominated prominent hedge fund manager Steve Bessent as US Treasury Secretary.”