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• The dollar weakened against major peers on Thursday as U.S. Treasury yields tumbled and traders scaled back expectations on the number of rate hikes the Federal Reserve would implement amid weakening economic data and heightened market volatility.
The benchmark 10-year Treasury yield hit a three-month trough of 2.845 percent. It was last down 7 basis points at 2.851 percent.
The euro was 0.28 percent higher against the dollar at $1.1375.
The dollar has been under pressure this week as an inversion in part of the U.S. yield curve raised a red flag for a potential recession.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.810 after touching an earlier high of 97.205.
• Fed policymakers are still widely expected to raise interest rates again at their Dec. 18-19 meeting, but the market focus is on how many rate hikes will follow in 2019.
• Interest rate futures implied traders see no more than one rate increase from the Fed in 2019, compared with expectations a month earlier for possibly two rate hikes, according to CME Group's FedWatch program.
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• The yield on the benchmark 10-year Treasury note dropped to 2.83 percent Thursday as investors continued to flee riskier assets on fears of continued trade conflict and a possible economic slowdown.
The 10-year rate has reversed its 2018 climb in recent weeks, beset by falling oil prices, trade worries and volatile equity markets. The yield — used as a barometer for borrowing costs for both the public and private sectors — has dropped from highs above 3 percent as recently as Monday.
The yield on the 30-year Treasury bond dropped 4 basis points to 3.136 percent. The yield on the 2-year Treasury note sank 6 basis points to 2.752 percent. After the morning's fall, the yield on the 10-year note later rebounded to near 2.87 percent in afternoon trading. Bond yields move inversely to prices.
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• The US President Trump is confident that an agreement with China can be reached within the next 90 days as the teams of both sides are now having smooth communications and good cooperation.
• The U.S. economy is “performing very well overall,” Federal Reserve Chairman Jerome Powell said in remarks prepared for the opening of a rural housing conference in Washington.
The job market in particular “by many national-level measures...is very strong,” with unemployment at a 50-year low, Powell said, capping a week of widespread market nervousness with a reminder that the U.S. economy continues to expand.
• Higher trade tariffs have had a “relatively small” effect on the economy so far but they have hurt confidence and some business investments, which hurts U.S. employment and economic growth, Federal Reserve Bank of New York President John Williams said on Thursday.
• Atlanta Federal Reserve bank president Raphael Bostic on Thursday said he felt the Fed should continue raising rates towards a “neutral” level, noting that despite being “beset by increasing uncertainties” the U.S. economy remained strong.
“I’m not seeing clear signs of overheating, nor am I seeing any indications of a material weakening in the macroeconomic data at the moment,” Bostic said in written remarks that largely looked beyond recent market turbulence, and called for a cautious move by the Fed to a neutral interest rate.
• Most Japanese firms expect flat or weaker domestic growth next year and are even more pessimistic about global growth amid concerns over the impact of the U.S.-China trade war and a planned sales tax hike at home, a Reuters poll showed.
• Bank of Japan Governor Haruhiko Kuroda said on Friday he expected British and European Union authorities to work together to avert a “catastrophic” situation in financial services even in the event of a no-deal Brexit.
But the impact on customs, transportation and trade of goods and services could be “quite big” if Britain leaves the EU next March without a deal, Kuroda told parliament.
• Parliament’s vote on Prime Minister Theresa May’s Brexit deal will go ahead on Dec. 11, her office said on Thursday, rejecting suggestions from lawmakers that she should seek ways to avoid a defeat so big it might bring down the government.
• OPEC has reportedly agreed to cut oil production, but the cartel ended its closely-watched meeting on Thursday without specifying how many barrels it would aim to remove from the market.
OPEC delayed its decision until after it meets on Friday with Russia, which has so far refused to commit to a specific quota.
• Oil prices tumbled about 3 percent on Thursday as OPEC reportedly agreed to cut production, but ended its closely-watched meeting without a decision on how much crude the cartel will take off the market.
International benchmark Brent crude fell $1.77, or 2.9 percent, at $59.79 a barrel by 2:22 p.m. ET, after falling to a session low at $58.36. U.S. West Texas Intermediate crude ended Thursday's session down $1.40, or 2.7 percent, at $51.49, bouncing from a session low of $50.08.
Reference: Reuters, CNBC, FXStreet
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