That part about the dollar no longer moving in tandem with 10-year Treasury yields really caught my eye. Could you explain a bit more about why their divergence is so unusual, and what it might signal?
Sure - typically, if a country has higher interest rates, capital moves there. That means people buy the currency to invest in that country’s debt. More people selling their currency to buy dollars pushed the dollar up. Divergence suggest capital is leaving the country and the yields are going up in desperation to persuade investors to stay. Usually an emerging market phenomenon
That part about the dollar no longer moving in tandem with 10-year Treasury yields really caught my eye. Could you explain a bit more about why their divergence is so unusual, and what it might signal?
Sure - typically, if a country has higher interest rates, capital moves there. That means people buy the currency to invest in that country’s debt. More people selling their currency to buy dollars pushed the dollar up. Divergence suggest capital is leaving the country and the yields are going up in desperation to persuade investors to stay. Usually an emerging market phenomenon