US trade price data for April came in above forecasts and pushed US Treasury yields higher. Import prices rose 1.9% month on month and export prices rose 3.3% month on month, the fastest monthly increases since early 2022 for both measures.
Import prices excluding petroleum increased 0.7%, above the 0.5% expected. This was lower than levels recorded in January and February this year.
US yields rose across the curve later in the day, with limited news flow. The 2-year Treasury yield ended 3 basis points higher and moved back above 4.00%.
On a one-day view, the US dollar was the strongest performer among G10 currencies. The article notes it was produced using an AI tool and reviewed by an editor.
The current market environment is showing echoes of what we saw back in May 2025. The latest April CPI report, released this week, showed inflation at 3.6% year-over-year, coming in hotter than the 3.4% that was expected. This has pushed the 2-year Treasury yield up to 4.85%, a level we haven’t seen since the beginning of this year.
This dynamic is strikingly similar to what we observed in 2025 when surprisingly strong trade price data sent the two-year yield above 4.00% and made the dollar the top G10 currency. The Dollar Index (DXY) has already rallied to test the 106.00 level in response to the recent data. This suggests that the market playbook for hotter-than-expected inflation remains consistent.
Given this, traders should consider buying call options on dollar-tracking ETFs like UUP for the coming weeks. This strategy provides direct exposure to a strengthening dollar, which is likely if yields stay elevated. The defined risk of an options contract makes it a controlled way to position for continued dollar gains.
Another approach is to anticipate that the Federal Reserve will delay any potential rate cuts. Buying put options on long-duration Treasury bond ETFs, such as TLT, would be profitable if yields continue to rise and bond prices fall. This position is a direct bet on the market pricing in a more hawkish central bank for longer.
