FX Daily: Bearish Yield Curve Steepening Hits Global Risk Assets (ING)

Key Takeaways

• 1.A bearish steepening of the US yield curve, driven by higher-than-expected inflation data, is the dominant market force supporting the dollar and weighing on risk assets.
• 2.The combination of high oil prices and rising long-dated bond yields is creating a 'bearish double whammy' for emerging market currencies (EMFX) and growth expectations in Europe.
• 3.UK political instability and a potential leadership election could add a 3-4% risk premium to Sterling, while the Bank of England faces pressure to turn more hawkish.

Table of Contents

• USD: Pressure builds on the Fed to turn less dovish
• EUR: Bond sell-off to weigh on growth expectations
• GBP: Local and global problems
• CEE: The situation is becoming too heavy for the region

Report data

A bearish steepening of the US yield curve is weighing on risk assets and supporting the dollar

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FX Daily is shown in chronological order through this edition, published on May 18, 2026.

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