Technically, when the dollar weakens monetary policy is easing. Lower rates is conducive with a weaker dollar. The opposite is true when the Fed is undergoing a tightening program, such as now. This usually rings true, but not always.
The dollar index continues to slide, off by nearly 7% for the year. This is precisely what the Trump administration asked for. Well, they got it.
Euro vs Dollar
On the other hand, yields have been rising over the past month — countermanding the move in the dollar. I can’t make any sense of it.
The 2s and 10s are now at a 90bps spread, which is a positive side note for banks.
The positive spin is this. The weakening dollar is helping US exporters compete and the minor blip in rates is insignificant in the big scheme of things. If anything, the inflation in the yield spreads lends to an increase in profitability in the banking sector, permitting them to take a pole position in the market, snatching it from over-owned tech.
Maybe today’s sell off isn’t so bad after all. Consider the fact that markets have been infiltrated by untrained vagrants, mountebanks keenly fixed on a profit angle without a gameplan in place to deal with adverse conditions. Thus, we are seeing a flush out, coupled with a rotation into banks and under-owned oils.
Let’s see how the days will end. It’s not the end of the world just yet, unfortunately.
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WTIC bounce to 47-48. Followed by re-test 40. 38 better hold or, Katie Bar the door. $USD next stop 94.If that doesn’t hold, 91 and possibly 88.
T Yields rising —- Foreigners dumping.
Maybe. But the move isn’t all that big. Agreed?
Agree. Still within range. Haven’t broke out or down in some time. Range-bound action.
UPS is predicted to accelerate growth from under 3% to over 8% per year …and it’s yielding over 3% right now! Sounds like a bargain. Bought puts here.
DXY respite rally on the way.
LOLZ. is that an upside down cup and handle in the nasdaquaries..
Could this possibly be an INTRADAY trick-whipsaw instead of the standard …good day-bad day… trick?
#fullyusurped lapdog
I think rising yields and falling dollar can be explained by the rising Euro – 58% of the dollar index. After the Draghi speech the Euro has been on a tear, and the perception is that European rates are going high and probably faster than in the U.S. #long Euro