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Dollar hits to 2-1/2-month peak as US rates, election eyed

The U.S. dollar rose to a fresh 2-1/2-month high on Tuesday, continuing its recent ascent on expectations the Federal Reserve will temper its interest rate cut path, while investors positioned ahead of an apparently tight U.S. presidential election. The greenback has risen for three straight weeks and is on track for its 15th gain in 17 sessions as a run of positive economic data has diminished expectations about the size and speed of rate cuts from the Fed, which has pushed U.S. Treasury yields higher. The yield on the benchmark 10-year U.S. Treasury note reached 4.222% on Tuesday, its highest since July 26.

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What a soft landing would mean for the US Treasury market

A soft landing for the U.S. economy could have serious implications for the Treasury market, as per analysts at BCA Research. In the note, the analysts say that with recent positive economic data pushing the 10-year Treasury yield into what they define as the “Soft Landing Zone,” investors may see stabilization in yields even as the economy avoids recession. As BCA’s analysts note, in such a scenario, the Fed's easing of monetary policy would continue, but without a full-blown recession requiring aggressive cuts.

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Wall Street ends slightly lower after higher than expected inflation, jobless claims

(Reuters) -Wall Street's main indexes closed lower on Thursday as investors looked to higher-than-expected inflation and unemployment claims for indications on the health of the U.S. economy and the path for interest rates. In a separate report released on Thursday, jobless claims also rose to 258,000 for the week ending Oct. 5, versus an estimate of 230,000. "Investors were torn between a stronger than expected CPI report and a weaker than expected unemployment claims report," said Jack Ablin, chief investment officer at Cresset Capital in Chicago.

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