Payrolls resurgence strengthens the case for a dollar rebound

The sharp rebound in US non-farm payrolls in August means that FOMC rate hikes may come sooner rather than later. In turn, that points to a rebound in the US dollar and further upwards pressure on US Treasury yields in the near term, especially at the front end of the curve. But while higher discount rates are becoming more of a challenge for equities, we continue to think that renewed AI optimism will outweigh that headwind, at least in the near term.