USD surged to its highest point in 10 and a half months, mainly supported by the rising Treasury yields. Investors are looking ahead to the Fed’s plan to reduce the asset purchases, previously implied to be in November. The benchmark 10-year Treasury yields hit a three-month high to 1.5253%. Some of USD’s major counterparts also reacted to the tapering outlook. Both AUD and EUR dropped after the US Treasury Secretary Janet Yellen said that US inflation would probably reach 4% by the year-end. JPY also weakened against the USD to its lowest level in three months.
According to some market sources, China is asking state-owned firms to purchase some of Evergrande’s assets. Evergrande currently has $305 billion in liabilities and is on the brink of collapse. The crisis has influenced not just China’s domestic investment market but also international transactions. Beijing hopes to mitigate the potential social unrest that would happen if Evergrande collapses.