US 10-year yields are closing in on 4.30%, and our rates strategy team favours 4.50%. Intriguingly, the team notes that the US 10-year yield correlates most with the pricing of the policy rate four or five years forward. In other words, the Treasury sell-off is less about the terminal rate for this tightening cycle and more about where the Fed Funds rate settles under more normal conditions. Chair Powell could shed some light on this on Friday. The bottom line, however, is that it looks too early for the Fed to sound the all-clear on inflation and the Dollar probably holds its gains.

DXY is holding gains above the 100-DMA at 103.20 and can probably edge up to 104.00 this week.