Treasury 10 anni

Dollar rises on US Treasury yields

Expectations regarding the trend in Fed rates continue to influence the stock markets, leaving operators increasingly disoriented.
On the occasion of the meeting of the Federal Open Market Committee (FOMC), the stock markets were waiting for clearer signals; however, rates remained stuck at the 5.25-5.50% level, leaving uncertainty about possible future cuts.
In this context, Treasury yields have seen an increase, marking a step back compared to the recent values of US government bonds.
In the currency market, however, the dollar stands out for its recent rises.
A more detailed analysis could clarify market expectations.
Rates unchanged once again, eyes on March In the statement released during the FOMC meeting, no cuts to interest rates were announced, but the possibility of reducing the cost of credit was discussed.
Chairman Jerome Powell did not rule out a possible cut in March, but did not confirm it.
Inflation continues to be a central topic in discussions with the market; Despite the evident progress, Powell highlighted the uncertainty of the future path, with inflation approaching the Federal Reserve's 2% target, but not yet reaching it.
This uncertainty reflects the questions of the market, which wonders whether inflation will reach the set target or whether it will stabilize at higher levels.
Dollar rising driven by US Treasury yields The dollar, represented by the DXY index (Dollar Index) which evaluates its performance compared to a basket of currencies, has shown an ascending trend since the beginning of 2024.
This trend originates from initial concerns about a significant delay in expected rate cuts, in contrast to the year-end optimism generated by the statements of Federal Reserve Chairman Jerome Powell.
Despite market expectations, which anticipated the end of rate increases and a reduction in the risk associated with a more stringent monetary policy for longer, US Treasury yields have started to rise again after the declines at the end of the year.
This dynamic was accentuated this week, both at the FOMC meeting and in the following days.
The market appears to be reorienting itself towards the dollar, likely anticipating an adjustment in US yields, in line with the expectation of high rates for an extended period.
A relevant signal for the market could emerge from the publication of the next data on the US labor market: tomorrow the results of the Non Farm Payrolls and the unemployment rate will be released at 2.30 pm.
A shrinking job market could actually intensify a possible reduction in the inflation rate, causing a backlash on the dollar and Treasuries.
This would lead, once again, to a reversal of the trend, an event that would not represent anything new, especially in recent months.

Author: A.W.M.

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