Four Failed Breakouts: Why Dollar, Treasury Yields and Dow Still Can't Commit

August payrolls jumped to 162,000 from a revised 21,000 in July, far exceeding the 58,000 consensus. The unemployment rate held at 4.1%. Yet the dollar and Treasury yields both failed to sustain breakouts above key resistance. The Dow also ended the week in consolidation below its record high.

Friday's nonfarm payrolls report lifted the implied probability of a September rate hike from 49.4% to 59.4%. The 2-year yield rose to 4.423%, testing the 4.40 psychological level and the 2025 high near 4.424%, then retreated to close around 4.37%. The 10-year yield reached 4.81% but could not hold above that level and finished near 4.79%. The Dollar Index (DXY) climbed to 99.79–99.86, where the 38.2% retracement of the slide from 101.80 to 98.55 converges with the 55-day EMA, and reversed. DXY held above support at 98.55 but showed no sign of a decisive upside break.

These failed breakouts reflect a market that is not yet convinced of a sustained hawkish repricing. Fed Governor Christopher Waller, speaking earlier in the week, said his September vote would depend more on inflation than on labor data. Waller called the labor market “in satisfactory shape” and highlighted the drop in three-month core inflation from 4.76% in February to 3.05% through July. He said if disinflation continues, he would support holding rates steady. A hot inflation print could push him toward a hike.