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2022-01-12

The dollar is starting to decouple from the Treasury yields

Two-year U.S. yields surpassed 0.94% on Tuesday, hitting levels last seen before the pandemic, as money markets moved toward pricing in four rate increases from the Federal Reserve this year. 

Yet the Bloomberg Dollar Spot Index has failed to budge much above a six-week low seen at the end of 2021. 

Bloomberg 11 January 2022

https://www.bloomberg.com/news/articles/2022-01-11/dollar-s-once-solid-link-to-higher-bond-yields-is-breaking-down







“The dollar’s peak is definitely behind us,”

The dollar is likely to keep weakening as the hypothesis of a wider U.S. deficit and a broader global recovery favoring assets outside America is now starting to play out, investors say. 

Bloomberg 13 January 2022

https://www.bloomberg.com/news/articles/2022-01-13/dollar-peak-bets-see-funds-switching-to-emerging-stocks-gold


What was interesting, however, was a sharp selloff for the dollar, triggered the moment the data came out. By day’s end, the Bloomberg broad dollar index had suffered its worst daily decline since last May. Only one day in 2021 saw the dollar fall as much as Wednesday

John Authers 13 January 2022







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