Dollar Up Treasury Yields Rise TIPS Breakevens Now

The U.S. dollar strengthened while Treasury yields nudged higher, leaving inflation‑linked securities largely steady. Market participants are recalibrating how quickly the Federal Reserve might trim policy, and incoming U.S. inflation and growth data are now front and center for traders.

Dollar direction and near‑term drivers

The U.S. Dollar Index traded near the upper 97s, reflecting renewed strength as investors trimmed the probability of aggressive Fed easing. Futures pricing implies roughly 40–45 basis points of cumulative rate cuts by year‑end, a bit less than earlier expectations. That recalibration has lent the dollar upside momentum versus major peers.

Exchange‑traded proxies and intraday moves

Dollar‑tracking ETFs mirrored the swing: the Invesco DB U.S. Dollar Index Bullish Fund (UUP) showed intraday gains, underscoring the broader demand for dollar exposure as yield differentials and Fed timing remain in focus.

Treasuries, TIPS and inflation expectations

U.S. Treasury yields ticked upward across the curve, with the 10‑year around the low 4.10% area and the 30‑year nearer to the mid‑4s. Shorter‑term yields moved up as well, contributing to a modest steepening of the curve that reflects shifting growth and policy expectations.

TIPS breakevens and real‑yield dynamics

Inflation‑indexed measures held in the mid‑2% range: 5‑year breakevens roughly 2.4% and 10‑year breakevens near 2.35–2.4%. The iShares TIPS ETF (TIP) was essentially flat to slightly softer intraday, indicating that market‑implied inflation expectations have been steady even as nominal yields rise.

Higher nominal yields combined with steady breakevens point to rising real yields, a dynamic that often supports a stronger dollar and can weigh on interest‑sensitive assets.

What traders are watching next

All eyes are on the upcoming core Personal Consumption Expenditures (PCE) inflation report and revised GDP figures. Those releases will be pivotal for refining the expected path and timing of Fed rate cuts. In addition, Fed commentary over the next sessions could either cement the dollar’s advance or reopen the market debate over easing timelines.

Bottom line: the dollar’s recent strength and the uptick in Treasury yields reflect a cautious pullback in Fed‑cut bets. Unless inflation or growth data shift materially, expect volatility around key releases as traders reassess policy odds and reposition across U.S. nominal and inflation‑linked bonds.