Dollar’s correlation with Treasury yields breaks down

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In response to President Donald Trump’s unstable policy maker, investors in American property are cool because of the US government’s bond yields and dollars.

The cost of taking government orrows and the value of the currency moves with each other in recent years, high yields usually indicate a strong economy and attract the flow of foreign capital.

However since Trump’s “Release Day” Tariff It was announced early in April that the yield of 10 years increased from 4.16 percent to 4.42 percent, and the dollar was reduced to 4.7 percent against the dollar currency basket. This month, the mutual relations between the two have come down to its lowest level in about three years.

“In general situations, [higher yields] The US economy is a sign of performing strongly. This is interesting for capital flow in the United States, “Shahab Jalinos, head of UBS G10 FX technique.

However, “If the US Debt is more risky, because due to financial anxiety and policy uncertainty, the US Debt is more risky, at the same time the dollar can be weak”, he said, “If the emerging market is more frequently seen” is a pattern.

The President’s “big, beautiful” tax bill, including recent moody Downgrade In the US credit rating in the United States, the deficit durability has brought a sharp focus for investors and weighs on bond prices.

Apollo’s chief economist Torcen Slack’s analysis suggests that the US government’s credit defaults are spread – which reflects the cost of defending LOAN against default – trading at levels like Greece and Italy.

Trump’s attack on the Federal Reserve Chair Jay Powell also spread the market. The President called Powell to the White House this week and told the central banker that he was Make a mistake Do not cut interest rates.

“The power of the US dollar partially comes from its institutional integrity: the rules of the law, the freedom of the central banking and the principles that are estimated. These are the components that make dollars as a reserve coin,” says “Global Head of Rate Trading in Citdel Securities.

“For the past three months,” calls it to the question, “adding” a big concern for markets now is whether we are moving away from the dollar’s institutional credibility “,” he said.

Treasury yield and deviation between it Dollar Represents a marked change from the type of recent years, while the expectations of financial policies and the direction of economic growth were important drivers for the cost of taking government orrow.

Amundi’s Global FX chief Andriam Koenig says the new pattern can increase the risk of investors who seek shelter.

“It changes everything. In the past few years, dollars in Portfolio … It was a very well stable reason,” he said. “When the dollar is a balanced factor, you have a stable portfolio heg

On Friday, Goldman Shutch analysts wrote in a note that investors were questioning whether there was a fundamental change in the relationship between the wealth class.

They wrote, “It is in the surrounding new anxiety.

Goldman analysts have added, “The recent events of the dollar weakness as well as low -yield and low equity prices.

The weak US currency partially has taken a short position in the dollar in this process to hedge these investments to the dollar-dynaminated assets partially.

Jolinos of UBS says, “The more principles of principles are uncertainty, the more likely it is that investors will increase their hedge ratio.”

“If the dollar assets are in the existing stock of the existing stocks you are talking about sales of many billions of dollars [the US dollar]”He added.

Goldman analysts suggested that investors should be positioned against the dollar weakness, especially the Euro, Yen and Swiss francs, all of which have grown in recent months. They added that “these new risks create a strong foundation for some allocation for gold”.

Louis Ashworth’s Additional Report