The 10-year Treasury yield surpassed 3%, reaching its highest level since 2011 on the previous trading day due to inflation expectations and Fed rate hikes. While there has been a growing consensus for higher rates this year, the debate among major investors is just beginning as they try to navigate short-term yields. In this context, the dollar continues to post gains while the euro returns to December 2017 lows, driven by the political crisis in Italy, where the consensus does not favor the European Union. This prompted a speech by German Chancellor Angela Merkel, who warned that the European Central Bank's expansionary monetary policy will not last forever, thus emphasizing the need for greater eurozone integration. Emerging market currencies (EMFX) have fallen for the third consecutive trading day, with the Mexican peso (MXN) falling to December 17 lows.
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